UC-NRLF 


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REVIEWS 


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SUNDRY  FREE  TRADE  ARGUMENTS. 


By   GEORGE    BASIL    DIXWELL 


Sff^i7/Mft7.  ^tWafAm 


r^ 


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University  of  California. 


(ri  K'r     i)W 


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<*^C>i^ 


REYIEWS 


OF 


BASTIAT'S   SOPHISMS  OF   PROTECTION, 


OF 


PROFESSOR  SUMNER'S   "ARGUMENT  AGAINST 
PROTECTIVE   TAXES," 


AND   OF 


PROFESSOR  PERRY'S  "FARMERS  AND  THE  TARIFF." 


BY 

GEORGE  BASIL  DIXWELL. 


[Repeinted  feom  the  Bulletin  of  the  National  Wool 
Association.] 


CAMBRIDGE : 
JOHN    WILSON    AND    SON. 

SSniiJcrsits  ilress. 
1882. 


;Z>^  /cr^ 


f :.'  H  i  V  E  E 


REVIEW 


OF 


BASTIAT'S   SOPHISMS   OF  PROTECTION. 


The  preface  tells  us  that  "  the  primary  object  of  the  League 
is  to  educate  public  opinion,  to  convince  the  people  of  the 
United  States  of  the  folly  and  wrongfulness  of  the  protective 
system."  It  quotes  Senator  Morrill  as  saying  that  "  the  year 
1860  was  a  year  of  as  large  production  and  as  much  general 
prosperity  as  any,  perhaps,  in  our  history  "  ;  but  these  words 
would  probably  bear  a  different  aspect  if  read  with  the  con- 
text, as  the  condition  of  that  year  was  very  differently  de- 
scribed by  H.  C.  Carey  as  follows :  — 

"  What  it  is  which  may  be  positively  affirmed  in  reference  to  that 
fiuctuation  of  policy  which  struck  down  the  great  iron  manufacture,  at 
the  moment  at  which  it  had  just  begun  to  exhibit  its  power  for  good, 
would  seem  to  be  this:  that  in  the  British  monopoly  system  which 
thereafter  followed,  we  added  something  less  than  forty  per  cent,  to  our 
population  ;  seventy,  to  our  machinery  for  water  transportation ;  and  five 
hundred,  to  that  required  for  transportation  by  land ;  meanwhile  ma- 
terially diminishing  the  quantity  of  iron  applied  to  works  of  production. 
When  you  shall  have  carefully  studied  all  this,  you  may  perhaps  find 
yourself  enabled  to  account  for  the  facts,  that  in  the  closing  year  of 
the  free  trade  period,  railroad  property  that  had  cost  more  than  a 
thousand  millions  could  not  have  been  sold  for  three  hundred  and 
fifty  ;  that  ships  had  become  ruinous  to  nearly  all  their  owners  ;  that 
factories,  furnaces,  mills,  mines,  and  workshops  had  been  everywhere 
deserted ;  that  hundreds  of  thousands  of  working  men  had  been 
everywhere   seeking,   and   vainly   seeking,  to  sell  their  labor;   that 


4  REVIEW   OP  BASTIAT'S   SOPHISMS  OP  PROTECTION. 

immigration  had  heavily  declined ;  that  pauperism  had  existed  to  an 
extent  wholly  unknown  since  the  great  free  trade  crisis  of  1842 ;  that 
bankruptcies  had  become  general  throughout  the  Union;  that  power 
to  contribute  to  the  public  revenue  had  greatly  diminished ;  and 
finally,  that  the  slave  power  had  felt  itself  to  have  become  so  greatly 
strengthened  as  to  warrant  it  in  entering  on  the  Great  Rebellion." 

So  much  for  one  of  the  premises  of  the  preface.  Another 
of  the  premises  is  a  quotation  from  Miss  Martineau  made  to 
show  that  the  superiority  of  Great  Britain  in  manufactures 
was  not  attained  by  means  of  protection,  but  that  protection 
had  brought  Great  Britain  to  the  verge  of  ruin  in  1842. 

But  the  superiority  of  Great  Britain  was  gained  long  before 
1842.  The  troubles  at  that  time  were  the  result  of  over- 
trading, of  over-pushing  of  the  manufacturing  industries. 
Sir  Robert  Peel  afterwards  lost  his  head,  and  yielded  to  the 
Free  Trade  League,  who  were  waging  war  upon  the  land- 
owners, and  seeking  to  make  the  prosperity  of  England 
hang,  as  Carlyle  forcibly  said,  upon  being  able  to  manufac- 
ture cottons  a  farthing  a  yard  cheaper  than  other  people. 
The  millocracy  triumphed  over  the  landowners,  and,  for- 
tunately for  England,  the  gold  of  California  and  Australia 
brought  about  a  general  improvement  in  trade,  which  post- 
poned the  consequences  for  a  long  period.  But  they  are 
seen  now  in  Ireland,  and  may  soon  be  seen  in  England. 
Meanwhile  free  trade  has  not  prevented  scenes  in  England 
quite  equal  to  those  pictured  by  Miss  Martineau.  They 
occurred  from  1866  to  1870  ;  but  quotations  would  need- 
lessly swell  this  article. 

The  preface  adds, — 

"  Again,  it  is  said  there  is  need  of  diversifying  our  industries,  as 
though  industry  would  not  diversify  itself  sufficiently  through  the 
diverse  tastes  and  predilections  of  individuals, —  as  though  it  was 
necessary  to  supplement  the  work  of  the  Creator  in  this  behalf  by 
human  enactments  founded  upon  reciprocal  rapine." 

The  "  work  of  the  Creator  "  and  "  reciprocal  rapine  "  are 
good  rhetoric  :  they  are  not  logic.  They  take  for  granted  the 
question  Avhich  is  to  be  proved.      The   pretty  alliteration 


REVIEW   OP  BASTIAT'S   SOPHISMS  OF  PROTECTION.  5 

might  delight  a  doctrinaire :  it  would  produce  no  effect 
upon  the  masculine  judgment  of  a  Napoleon,  against  whom 
Bastiat  modestly  puts  himself. 

We  come  now  to  Chapter  I.,  entitled,  "Abundance, — 
Scarcity." 

Throughout  this  chapter  M.  Bastiat  supposes  that  abun- 
dance and  cheapness  are  necessarily  coexistent.  He  does  not 
know,  or  he  does  not  appear  to  know,  that  a  low  price  is 
perfectly  compatible  with  great  scarcity ;  that  abundance 
exists  only  where  a  large  supply  is  co-existent  with  a  large 
effective  demand  ;  that  it  is  in  vain  to  offer  things  for  a  little 
money  to  one  who  has  no  money,  and  no  work  by  which  to 
earn  money.     At  the  end  he  says  : — 

"  But  it  is  answered,  if  we  are  inundated  with  foreign  goods  and 

produce,  our  coin   will   leave    the    country Well,  and  what 

matters  that  ?  Man  is  not  fed  with  coin.  He  does  not  dress  in  gold, 
nor  warm  himself  with  silver.  What  difference  does  it  make  whether 
there  be  more  or  less  coin  in  the  country,  provided  there  be  more 
bread  in  the  cupboard,  more  meat  in  the  larder,  more  clothing  in  the 
\[)ress,  and  more  wood  in  the  cellar  ?  " 

Yes  !  provided  ;  but  how  would  it  be  provided  there  was 
much  less  of  all  these  things  ? 

Did  not  M.  Bastiat  know  that  the  very  fact  of  the  coin 
leaving  the  country  proved  that  the  home  industries  were 
not  adequate  to  pay  for  the  importations,  and  that  these 
must  therefore  cease  as  soon  as  the  coin  was  exhausted  ? 
A  country  has  perchance  four  thousand  millions  of  mechani- 
cal and  manufactured  products,  the  result  of  its  own  industry. 
It  hankers  after  cheapness,  and  opens  its  ports.  It  is  deluged. 
It  gets  products  at  first  more  cheaply.  But  the  industries 
in  which  it  has  an  advantage  furnish  only,  OR  can  be  taken 
only  to  the  extent  of,  one  thousand  millions.  When  its 
treasure  is  gone,  it  must  satisfy  itself  with  one  thousand 
millions.  These  it  may  or  may  not  thereafter  get  cheaply. 
Probably  it  will  get  them  very  dearly  by  reason  of  the  low 
price  at  which  it  will  have  to  sell  what  previously,  with  a 
fully  employed  population,  it  could  use  itself.     But  whether 


6  REYIEW  OP  BASTIAT'S  SOPHISMS   OF  PROTECTION. 

it  gets  its  small  pittance  cheaply  or  clearly,  it  must  go  without 
the  other  three  thousand  millions.     This  is  what  it  will  get 
for  mistaking  cheapness  for  abundance. 
Bastiat  concludes  as  follows : — 

"  To  restrictive  laws  I  offer  this  dilemma, —  Either  you  allow  that 
you  produce  scarcity,  or  you  do  not  allow  it.  If  you  allow  it,  you 
confess  at  once  that  your  end  is  to  injure  the  people  as  much  as 
possible.  If  you  do  not  allow  it,  then  you  deny  your  power  to  dim- 
inish the  supply,  to  raise  the  price,  and  consequently  you  deny  having 
favored  the  producer.  You  are  either  injurious  or  inefficient.  You 
can  never  be  useful." 

M.  Bastiat  evidently  thought  he  had  used  brilliant  logic. 
But  restrictive  laws  have  for  their  object  to  produce  abun- 
dance, and  they  effect  their  object :  if  they  raise  the  price, 
they  increase  in  a  much  greater  degree  the  effective  demand, 
—  the  ability  to  pay  the  price.  The  limitation  of  the  for- 
eign market  makes  it  simply  impossible  to  employ  the  whole 
working  force  of  the  United  States  upon  those  industries 
in  which  it  has  a  decided  advantage.  The  rest  must  be 
employed  upon  fields,  less  advantageous  perhaps,  but  infin- 
itely more  advantageous  than  living  in  the  poorhouse  or 
helping  somebody  do  what  he  can  perfectly  well  do  alone. 

Napoleon  hit  the  mark  when  he  said  that  "  if  an  empire 
were  made  of  adamant,  the  economists  would  grind  it  to 
powder." 

Bastiat  desires  the  consumer  to  have  everything  offered  to 
him  at  a  cheap  rate ;  he  is  entirely  indifferent  about  his 
having  or  not  having  the  means  of  buying.  In  fact,  the 
consumer  of  the  free  trader  was  described  by  Homer,  under 
the  name  of  Tantalus  : — 

"  Then  Tantalus  along  the  Stygian  bounds  ; 
Pours  out  deep  groans  ;  with  groans  all  hell  resounds. 
From  circling  floods  in  vain  refreshment  craves, 
And  pines  with  thirst  amidst  a  sea  of  waves  ; 
"When  to  the  water  he  his  lip  applies, 
Back  from  his  lip  the  treacherous  water  flies. 


REVIEW   OF  BASTIAT's  SOPHISMS   OP   PROTECTION.  7 

Above,  beneath,  around  his  hapless  head, 

Trees  of  all  kinds  delicious  fruitage  spread  ; 

There  figs,  sky -dyed,  a  purple  hue  disclose ; 

Green  looks  the  olive,  the  pomegranate  glows  ; 

There  dangling  pears  exalted  scents  unfold. 

And  yellow  apples  ripen  into  gold. 

The  fruit  he  strives  to  seize  ;  but  blasts  arise, 

Toss  it  on  high,  and  whirl  it  to  the  skies." — Pope^s  Odyssey. 

For  nineteen  twentieths,  nay  the  whole  of  the  commu- 
nity, production  is  the  condition  precedent  of  consumption. 
That  which  a  nation  can  consume  in  a  year  is  its  annual 
product.  Strike  to  the  earth  a  third  part  of  its  industries,  and 
you  by  the  very  act  stril^e  off  a  third  of  the  average  indi- 
vidual income.  The  economist  who  is  not  aware  of  these 
things  has  studied  to  little  purpose  either  Adam  Smith  or 
J.  B.  Say :  he  has  gathered  in  their  chaff,  and  left  the  wheat 
untouched.  Abundance  is  impossible  to  the  man  of  the 
empty  purse. 

After  the  Bastiat  fashion,  I  will  offer  a  dilemma  to  the 
free-traders.  Either  they  know  the  above,  or  they  do  not 
know  it.  If  they  know  it,  they  must  cease  preaching  free- 
trade  ;  if  they  do  not  know  it,  they  should  come  to  the 
people  of  the  United  States  to  learn,  but  not  to  teach,  politi- 
cal economy. 

Chapter  II.  is  entitled  "  Obstacle  —  Cause." 
In  this  chapter  Bastiat  misses  entirely  the  perception  of 
the  protectionist  doctrine,  which  is  not  that  wants  are  riches, 
or  that  labor  is  riches,  but  that  the  ability  to  satisfy  wants 
is  riches.  The  gross  annual  product  of  the  nation  being  A, 
will  not  be  diminished  by  the  introduction  of  machinery.  It 
will  be  diminished  by  substituting  a  foreign  for  a  domestic 
product,  unless  the  foreign  product  is  so  much  cheaper  as  to 
immensely  increase  consumption  in  spite  of  the  diminished 
means  of  purchase,  and  unless  also  the  relations  of  the  two 
nations  financially  are  such  that  the  imports  will  be  paid 
for  by  exports :  and  even  then  the  new  arrangement  leaves 
the  country  less  independent ;  withdraws  from  it  the  possi- 


8  REVIEW   OF   BASTIAT'S   SOPHISMS    OP   PROTECTION. 

bility — nay,  probability — of  afterwards  reducing  the  cost  by 
increased  skill  and  by  invention  ;  lessens  the  diversification 
of  industries ;  and  takes  from  the  nation  the  incidental  advan- 
tages which  often  spring  from  the  stimulating  effect  of  one 
industry  upon  others.  Who  can  measure  the  effect  in  the 
United  States  of  the  introduction  of  the  cotton  manufacture 
upon  the  other  industries  in  which  machinery  assists  labor  ? 
If  we  had  never  had  the  cotton  manufacture,  it  is  not  likely 
that  even  our  agriculture  would  have  reached  anything  like 
its  present  efficiency ;  and  many  other  arts  would  probably 
not  have  been  acquired  at  all  up  to  the  present  day. 

In  this  chapter  Bastiat  says,  with  italics,  that  "  labor  is 
never  without  employment.^''  This  is  flying  in  the  face  of  facts 
with  a  vengeance.  What  can  be  the  value  of  the  method  of 
reasoning  which  conducts  a  clever  man  to  such  a  conclusion 
in  spite  of  his  eyes  and  ears? 

Chapter  III.  is  entitled  "  Effort  —  Result." 

In  this  chapter  Bastiat  quotes  a  number  of  French  legis- 
lators ;  and  if  he  quotes  them  correctly,  the  reasons  fhey 
gave  for  their  votes  or  measures  were  not  very  wise,  and 
furnished  an  opportunity  for  an  easy  victory.  But  it  often 
happens  that  practical  men  are  not  introspective,  not  accus- 
tomed to  put  into  words  the  real  reasons  which  underlie  their 
actions.  When  called  upon  to  do  so,  they  fumble  about  in 
their  minds,  and  end  in  producing,  not  their  real  reason,  but 
some  very  inadequate  substitute  of  it.  A  "  smart "  writer 
like  M.  Bastiat  at  once  falls  upon  their  alleged  reasons, 
demolishes  them,  and  concludes  that  their  authors  were 
fools,  when  very  likely  they  w^ere  in  reality  far  wiser  than 
he  who  felt  himself  entitled  to  sit  in  judgment.  It  may  well 
be,  taking  all  things  into  consideration,  that  the  opulence  of 
France,  altogether,  is  increased  rather  than  diminished  by 
herself  producing  iron  at  sixteen  francs  which  she  could  buy 
of  England  at  eight :  her  safety  and  independence  are  cer- 
tainly promoted. 

Chapter  IV.  is  entitled  "  Equalizing  of  the  Facilities  of 
Production." 


REVIEW   OP   BASTIAT'S   SOPHISMS    OP   PROTECTION.  9 

M.  Bastiat  first  quarrels  with  the  phrase,  which  has  not 
certainly  mathematical  exactitude,  but  which  can  easily 
enough  be  understood  by  any  one  whose  object  is  to  get  at 
ideas,  and  not  to  triumph  over  words.  It  means  that  where 
one  nation  has  an  advantage  over  another  as  to  cheapness  of 
production^  —  such  as  Great  Britain  has  over  the  United 
States  by  reason  of  cheaper  labor,  not  yet  compensated  by 
greater  skill  upon  our  part,  —  she  can  beat  down  and  annihi- 
late our  efforts  to  help  ourselves  and  to  acquire  greater  skill. 
She  has  been  prevented  from  doing  this  by  our  protective 
duties  ;  and  in  many  articles  we  have  already  acquired  a 
skill  sufficient  to  give  us  here  at  home  the  articles,  even  at  a 
cheaper  monied  price  than  we  could  import  them.  In  some 
we  have  not  succeeded  as  yet  so  well ;  and  in  some  we  prob- 
ably never  shall,  so  long  as  we  strive  to  keep  up  among  us 
that  higher  rate  of  real  wages  which  is  our  chief  hope  for  the 
future.  But  the  higher  price  will  be  much  more  than  com- 
pensated to  the  nation  by  the  double  production  provoked  by 
a  home  exchange,  as  against  the  single  production  provoked 
by  a  foreign  exchange ;  as  also  by  our  greater  security  both 
in  peace  and  in  war,  and  also  by  the  incidental  stimulus 
which  one  industry  gives  to  others. 

Bastiat  says  that  in  this  case,  as  in  all,  "  the  protectionists 
favor  the  producer,  while  the  poor  consumer  seems  entirely  to 
have  escaped  their  attention."  He  seems  to  forget  that  nearly 
all  of  the  poor  consumers  are  consumers  only  in  consequence 
of  their  being  able  to  produce  ;  and  that  those  few  who  do 
not  produce  themselves  are  dependent  upon  the  profits  of 
productive  instruments,  which  would  cease  to  yield  a  profit 
if  the  producing  consumers  could  not  produce,  and  therefore 
could  not  consume.  If  the  consumers'  means  of  buying 
were  rained  down  miraculously  from  the  sky,  the  Bastiat 
philosophy  might  be  excellent ;  but  as  long  as  their  means  of 
buying  are  entirely  dependent  upon  their  first  producing,  it 
would  seem  that  the  individual  should  be  considered  in  both 
relations. 

Bastiat  contends,  first,  that  equalizing  the  facilities  of  pro- 
duction is  to  attack  the  foundations  of  all  trade. 

2 


10  REVIEW  OF  BASTIAT'S   SOPHISMS   OP  PROTECTION. 

To  attempt  to  equalize  all  facilities — say,  rather,  to  counter 
balance  all  advantages — might  be  open  to  his  objection.  But 
the  American  protectionist,  for  whose  conversion  the  volume 
under  review  was  published,  does  not  propose  to  compensate 
great  differences  growing  out  of  soil  and  climate.  He  does 
not  propose  to  grow  pineapples  under  glass  at  ten  times  the 
cost  of  importation,  nor  to  do  any  other  of  the  like  absurdities 
imagined  by  Bastiat.  What  he  does  propose  is,  to  balance 
the  altogether  artificial  advantages  arising  out  of  accidental 
superiority  in  skill  until  we  can  ourselves  acquire  the  like 
skill  ;  to  balance  the  difference  arising  out  of  our  dearer 
labor  and  capital ;  and  to  protect  our  industries  from  the 
mischievous  attacks  in  which  products  are  sold  under  cost 
for  the  very  object  of  destroying  competitors.  We  have  full 
faith  that  the  competition  of  fifty  millions  of  people  will  suf- 
fice to  bring  as  low  prices  and  as  much  skill  as  are  possible 
under  the  circumstances ;  and  that  the  result  will  be  that  we 
shall  produce  everything  which  our  climate  and  soil  permit 
at  considerably  less  sacrifice  of  labor  and  abstinence  than 
the  same  things  cost  when  brought  from  abroad. 

M.  Bastiat  says,  second,  that  it  is  not  true  that  the  labor 
of  one  country  can  be  crushed  by  the  competition  of  more 
favored  climates. 

But  it  is  quite  true  that  domestic  arts  and  manufactures, 
which  are  most  important  to  possess,  can  be  crushed  by  the 
competition  of  countries  having  cheaper  labor  and  equal  or 
greater  skill.  If  he  meant  his  No.  2  to  assert  or  insinuate 
the  contrary,  the  hardihood  of  the  assertion  or  insinuation 
would  hardly  require  an  answer.  Deductive  reasoning  shows 
that  it  can,  and  history  shows  that  it  does. 

He  says,  third,  that  protective  duties  cannot  equalize  the 
facilities  of  production  ;  fourth,  that  freedom  of  trade  equal- 
izes these  conditions  as  much  as  possible  ;  and,  fifth,  that 
the  countries  which  are  the  least  favored  by  nature  are  those 
which  profit  most  by  freedom  of  trade. 

In  all  this  he  chooses  to  misunderstand  what  is  meant  by 
equalizing  the  facilities  of  production.  This  is  simple  trifling. 
Next  he  exemplifies  his  position  by  supposing  a  case  of  Pari- 


REVIEW   OF  BASTIAT's  SOPHISMS   OP   PROTECTION.  11 

sian  speculators  producing  oranges  at  ten  times  the  cost  of 
importing  tliem  from  Portugal,  and  being  protected  by  a  duty 
of  nine  hundred  per  cent.  This  is  also  trifling :  it  has  noth- 
ing to  do  whatever  with  any  actual  question  as  to  protection. 
Then  follow  several  excellent  paragraphs,  showing  how  any 
improvement  in  production  spreads  itself  to  the  advantage  of 
the  whole  community,  and  showing  how  natural  advantages, 
and  also,  finally,  the  advantages  arising  from  inventions,  come 
to  be  enjoyed  by  consumers  gratis,  they  paying  only  the 
necessary  wages  of  labor  and  abstinence.  But  after  all  those 
excellent  and  really  eloquent  paragraphs  comes  this :  — 

"  Hence  we  see  the  enormous  absurdity  of  the  consuming  country, 
which  rejects  produce  precisely  because  it  is  cheap.  It  is  as  though 
we  should  say,  '  We  will  have  nothing  of  that  which  Nature  gives  you. 
You  ask  of  us  an  effort  equal  to  two,  in  order  to  famish  ourselves  with 
articles  only  attainable  at  home  by  an  effort  equal  to  four.  You  can 
do  it  because  with  you  Nature  does  half  the  work.  But  we  will  have 
nothing  to  do  Avith  it;  we  will  wait  till  your  climate,  becoming  more 
inclement,  forces  you  to  ask  of  us  a  labor  equal  to  four,  and  then  we 
can  treat  with  you  vpon  an  equal  footing  J  " 

This  is  one  of  Bastiat's  extreme  cases,  but  under  certain 
circumstances  it  would  not  be  altogether  so  absurd  as  he  ap- 
pears to  imagine,  e.  g.  :  — 

The  products  in  which  the  United  States  have  an  advantage 
are  agricultural.  They  can  produce  enough  for  themselves 
and  as  much  more.  Call  the  possible  product  2  A.  Suppose 
that  what  they  cannot  produce  except  at  a  double  effort  are 
mechanical  and  manufactured  products.  Call  these  M.  There 
is  a  foreign  demand  for  |-  A.  Under  free  trade  there  can  be 
produced  and  imported  1|-  A ;  M  imported  being  equal  to 
|-  A ;  and  the  country  will  have  for  consumption  A  +  M. 
Now  remove  one  half  of  the  population  from  agriculture  to 
the  mechanical  and  manufacturing  arts.  The  half  who  are 
left  can  still  produce  1  A,  or  enough  agricultural  products 
for  the  whole  population ;  and  the  other  half  can  produce  M 
by  a  double  effort.  There  will  then  be  for  consumption 
A  -{-  M,  notwithstanding  the  double  effort.      But  suppose 


12  REVIEW   OF    BASTIAT'S   SOPHISMS   OF   PROTECTION. 

the  required  effort  not  double,  but  1|^.  The  product  will 
then  be  A  +  |-  M.  The  whole  population,  both  agricultural 
and  mechanical  and  manufacturing,  will  then  have  50  per  cent 
more  of  M  under  protection  than  under  free  trade,  even  if  the 
effort  necessary  be  50  per  cent  greater  to  produce  M.  It  the 
effort  (measured  by  labor  and  abstinence)  be  the  same,  then 
the  product  under  protection  will  be  A  +  2  M. 

The  mechanical  and  manufacturing  arts  then  which  are 
introduced  under  a  duty  of  50  per  cent  in  such  circum- 
stances, will  at  once  give  the  whole  country  one  half  more  of 
their  products  than  can  be  had  under  free  trade  ;  and,  as  skill 
increases,  they  will  give  more  and  more ;  and  their  skill  will 
react  upon  agriculture,  rendering  its  processes  more  effectual, 
and  enabling  a  still  greater  withdrawal  of  men  from  agricul- 
ture to  the  arts.  And  the  home  market  will  be  alwaj^s  safe 
against  Avar  and  against  excessive  foreign  crops ;  and,  more- 
over, it  will  grow  step  by  step  with  the  population,  which  the 
foreign  market  never  can, 

M.  Bastiat  makes  a  great  friend  of  Nature  :  but  it  is  not 
against  Nature  that  the  American  protectionist  raises  his  bul- 
warks. He  imports  many  tropical  products  free  of  duty,  but 
he  intrenches  against  the  foreign  skill  which  is  not  natural 
but  purely  artificial,  and  which  is  speedily  overtaken  by  our 
own  ;  and  he  intrenches  against  the  lower  wages  current 
abroad,  which  we  do  not  wish  to  imitate  here.  In  spite  of  a 
60  per  cent  duty,  the  whole  country  is  richer  immediately,  and 
gains  more  and  more  as  skill  is  acquired. 

M.  Bastiat  says  that  we  call  the  free  traders  theorists,  and 
he  retorts  the  accusation  ;  but  he  mistakes  us.  We  do  not 
complain  of  them  for  being  theorists,  but  for  being  bad  the- 
orists, blundering  theorists,  theorists  who  use  arguments  in 
every  case  which  are  only  applicable  in  one  of  all  possible 
cases,  to  wit,  in  the  case  where  the  whole  population  can  be 
fully  occupied  in  those  industries  in  which  it  has  an  advan- 
tage, and  where,  also^  their  whole  surplus  can  find  steady, 
sure,  uninterrupted  markets.  In  this  very  exceptional  case, 
to  buy  in  the  cheapest  market  is  best  in  a  purely  financial 
aspect.     Their  proposition  is  not  universal,  not  one  of  even 


REVIEW   OF   BASTIAT's   SOPHISMS   OF  PROTECTION.  13 

frequent  application.  To  argue  from  it  as  if  it  were  a  uni- 
versal proposition,  as  the  free  traders  do,  is  to  violate  one  of 
the  fundamental  maxims  of  logic. 

Chapter  V,  —  "  Our  Productions  are  overloaded  with 
Taxes." 

Here  is  more  bad  theory.  We  are  taxed  heavily,  he  says. 
How  absurd,  then,  to  add  another  tax  which  makes  France 
pay  twelve  francs  for  iron  which  it  can  get  from  England  for 
eight.  The  blunder  here  consists  in  not  perceiving  that, 
although  the  extra  price  of  iron  may  in  a  certain  sense  be 
called  a  tax,  yet  it  is  of  an  entirely  different  nature  from  the 
other  things  called  by  the  same  name.  Suppose,  for  instance, 
that  France  is  using  2,000,000  of  tons  of  iron  produced  in 
France  and  costing  twelve  dollars  a  ton.  Here  are  $24,000,000 
of  products  which  are  paid  for  by  other  $24,000,000  of  various 
French  products.  The  result  is  commodities  worth  $48,000,000, 
every  dollar  of  which  is  net  individual  income  to  some  French 
citizen,  as  has  been  well  shown  by  J.  B.  Say.  The  totality 
of  French  industries  is  in  equilibrium.  Each  employs  all  the 
capital  and  all  the  industry  it  can,  and  carries  along  its  nor- 
mal surplus  stock.  The  expansion  of  each  industry,  both  as 
to  capital  and  quantity  of  labor  employed,  is  limited  by  the 
extent  of  the  market.  Now  open  the  ports  and  bring  in  the 
2,000,000  tons  of  English  iron  at  eight  dollars.  The  imme- 
diate effect  upon  the  consumers  of  iron  is  that  the}^  save 
$8,000,000 :  but  the  general  demand  for  French  products  is 
diminished  $32,000,000.  The  importation  of  iron  selling  for 
$16,000,000  provokes  a  French  production  of  $16,000,000. 
The  homic  production  of  the  iron,  on  the  contrary,  gave  a  total 
home  product  of  $48,000,000,  —  a  difference  of  $32,000,000. 
It  is  true  that  the  community  saves  $8,000,000  in  the  price  of 
the  iron,  but  on  the  other  hand  its  aggregate  ability  to  con- 
sume is  reduced  $32,000,000;  and  under  these  circumstances 
it  may  w^ell  happen  that  its  ability  to  consume  imported  iron 
at  eight  dollars  will  be  less  than  its  ability  to  consume  home- 
made iron  at  twelve  dollars.  The  free-traders  call  the  sums 
collected  to  pay  the  interest  on  the  national  debt  and  the  ex- 


14  REVIEW  OP  BASTIAT's  SOPHISMS  OP  PROTECTION. 

penses  of  government  taxes^  and  they  call  the  extra  price 
(when  there  is  an  extra  price)  paid  for  home-made  products 
also  taxes.  But  they  are  entirely  different;  almost  as  different 
as  the  files  of  a  carpenter  and  the  files  of  a  regiment.  The  tax 
arising  out  of  protective  laws,  in  the  instance  under  examina- 
tion, takes  from  the  French  consumers  four  dollars  a  ton ; 
but  it  gives  them  twelve  :  the  net  result  is  that  they  are 
better  off  by  eight,  or  twice  the  amount  of  the  so-called  tax. 
This  flows  inevitably  from  Say's  proposition  that  the  whole 
price  of  everything  produced  in  a  country  is  net  individual 
income  to  some  citizen  of  that  country.  If  the  free-traders 
would  make  the  other  "  taxes  "  produce  a  similar  result,  we 
would  all  clamor  for  more  taxes. 

Chapter  VI.  is  called  "Balance  of  Trade."  He  begins  as 
follows :  — 

"  Our  adversaries  have  adopted  a  system  of  tactics  which  embar- 
rasses us  not  a  little.  Do  we  prove  our  doctrine  ?  They  admit  the 
truth  of  it  in  the  most  respectful  manner.  Do  we  attack  their  princi- 
ples ?  They  abandon  them  with  the  best  possible  grace.  They  only 
ask  that  our  doctrine,  which  they  acknowledge  to  be  true,  should  be 
confined  to  books ;  and  that  their  principles,  which  they  allow  to  be 
false,  should  be  established  in  practice.  If  we  will  give  up  to  them 
the  regulation  of  our  tariffs,  they  will  leave  us  triumphant  in  the  do- 
main of  theory." 

M.  Bastiat  was  in  error  as  to  the  attitude  of  protectionists 
generally.  They  do  not  admit  that  the  theory  of  the  free- 
traders is  correct,  nor  their  own  practice  wrong  ;  but  when 
worried  by  much  beating  of  gongs — represented  to  be  logical 
instruments  —  and  by  much  assumption  of  superiority  in 
reasoning,  they  have  often  been  inclined  to  reply  :  "  You 
puzzle  us  with  sophistical  riddles.  We  feel  them  to  be 
wrong,  but  have  not  the  time,  perhaps  not  the  ability,  to 
show  wherein  they  are  wrong.  We  have  seen  your  own 
chiefs  perplexed  with  the  fallacy  of  Achilles  and  the  tortoise, 
and  some  of  them  declaring  it  to  be  insoluble,  —  that  being  an 
argument  known  to  be  erroneous,  but  one  of  which  no  one 


REVIEW  OF   BASTIAT'S  SOPHISMS  OF  PROTECTION.  15 

has  ever  yet  given  a  wholly  satisfactory  explanation.  Now, 
we  feel  that  your  arguments  are  sophistical ;  we  are  so  sure 
of  it  that  we  are  ready  to  risk  our  fortunes  upon  the  belief. 
We  are  not  able  to  talk  you  down,  and  are  willing  you  should 
theorize  to  your  hearts'  content,  so  long  as  you  will  confine 
yourselves  to  theory."  Such  is  the  feeling  of  many.  It  is 
not  the  feeling  of  the  writer.  It  is  as  absurd  as  anything 
well  can  be  to  say,  "  So  and  so  may  be  very  well  in  theory, 
but  it  will  not  do  in  practice."  If  it  will  not  do  in  practice, 
it  most  assuredly  is  not  good  in  theory.  It  may  be  good  in 
pseudo-theory ;  but  true  theory  must  explain  practice,  or  be 
in  accord  with  it.  Sound  theory  and  sound  practice  are 
Siamese  twins.  As  was  said  before,  we  do  not,  as  you  have 
the  presumption  to  say,  object  to  you  as  theorists :  we  only 
object  to  you  as  bad  theorists. 

M.  Bastiat  gives  us  examples  in  which  every  merchant  will 
find  errors ;  upon  which,  however,  it  is  not  worth  while  to 
expend  time  and  patience,  —  the  main  object  of  the  chap- 
ter being  to  show,  what  everybody  knew  before,  namely, 
that  an  unusually  successful  voyage  brings  into  a  country  a 
much  larger  value  than  it  takes  out.  But  there  are  also  very 
unsuccessful  voyages,  which  bring  in  much  less  than  they 
take  out ;  and  everybody  who  knows  anything  of  commerce 
is  aware  that  the  average  result  is  cost,  expenses,  —  and  a 
profit  not  greater  than  what  is  usual  in  other  kinds  of  busi- 
ness. This  is  fact ;  and  this  also  is  the  result  which  the 
reasoning  of  all  respectable  economists,  from  Adam  Smith 
down,  points  out  as  what  must  necessarily  be  fact.  The 
balance  of  trade  in  our  days  is  so  complicated  by  the  transfer 
of  securities,  and  by  the  remittances  of  the  profits  upon 
foreign  investments,  that  no  certain  conclusion  can  be  drawn 
from  custom-house  statistics ;  but  for  all  that,  an  exportation 
of  treasure,  exceeding  greatly  the  product  of  the  country, 
indicates  an  adverse  balance  of  trade,  which  cannot  exist 
many  years  without  financial  convulsion. 

Chapter  VII.  is  entitled  "  Petition  from  the  Manufacturers 
of    Candles,    Wax-lights,    Lamps,    Chandeliers,    Reflectors, 


16  EEVIEW   OP  BASTIAT's  SOPHISMS   OP  PROTECTION. 

Snuffers,  Extinguishers ;  and  from  the  Producers  of  Tallow, 
Oil,  Resin,  Alcohol,  and  generally  of  Everything  used  for 
Lights." 

This  is  a  petition  against  sunshine,  and  regarded  as  per- 
siflage, it  is  excellent.  Considered  as  an  economical  argu- 
ment, it  can  impose  upon  no  one  who  has  the  least  com- 
mon-sense, or  the  least  logic,  which  is  only  common  sense 
put  into  a  formula.  As  the  sun  does  not  give  us  light, 
through  the  twenty-four  hours,  artificial  light  must  be  had 
and  can  be  had  only  through  labor.  If  the  circumstances 
are  such  that  by  procuring  it  from  abroad  the  gross  annual 
product  is  greater  than  it  is  by  producing  it  at  home,  then, 
financially  considered,  it  is  better  to  procure  it  from  abroad. 
But  this  case  seldom  occurs,  as  has  already  been  sufficiently 
shown. 

Chapter  VIII.  is  entitled  "  Discriminating  Duties." 
This  is  a  particular  case,  made  up  with  just  such  circum- 
stances as  might  lead  a  poor  wine-grower  to  draw  from  it 
illegitimately  an  universal  conclusion.  As  rhetoric,  intended 
to  deceive,  it  is  very  good.  It  is  entirely  unw^orthy  of  one 
who  is  seriously  investigating  national  interests. 

Chapter  IX.  is  entitled  "  Wonderful  Discovery." 
In  this,  M.  Bastiat  discovers  that  a  railroad  has  been  made 
between  Paris  and  Brussels  in  order  to  obviate  or  overcome 
natural  obstacles  to  trade,  but  that  the  duty  on  goods  be- 
tween the  two  places  was  an  artificial  obstacle,  and  conse- 
quently absurd.  The  answer  is,  that  the  railroad  was  built 
with  the  intention  of  removing  obstacles  from  desirable  and 
beneficent  communication.  It  was  not  built  to  facilitate  the 
passage  of  foreign  soldiers  to  Paris,  nor  to  facihtate  the 
invasion  of  the  markets  of  France  by  produce  that  is  not 
desirable.  Whether  the  introduction  of  the  produce  be 
desirable  or  not,  must  be  determined  b}''  other  reasons  than 
the  fact  that  a  railroad  exists  by  which  it  can  be  conveyed. 
Distance  is  an  obstacle  to  every  sort  of  communication. 
That  we  take  measures  to  overcome  the  obstacle  does  not 


REVIEW   OP   BASTIAT's   SOPHISMS   OF   PROTECTION.  17 

prove  that  every  sort  of  communicatigja^  is  prod  active  of 
opulence.  /^A^^^trk^'^$\ 

M.  Bastiat  says :  —  /^^  'T  I  V  E  R  S I  T  Y  ll 

"Frankly,  is  it  not  liurailiating  to  tm^.^ liinetee^tii  feent 
should  be  destined   to  transmit  to  future  age^  tbei'feii.s 
puerilities  seriously  and  gravely  practised  ?  " 

We  reply,  Frankly,  it  tvill  be  humiliating  to  the  nineteenth 
century  to  have  to  transmit  to  future  ages  Bastiat's  puerilities 
in  reasoning  as  examples  of  what  could  be  thought  Avorthy  of 
being  presented  to  France,  England,  and  the  United  States 
by  a  person  claiming  to  be,  and  by  many  even  highly  edu- 
cated persons  held  out  to  be,  an  eminent  logician. 

Chapter  X.,  entitled  "  Reciprocity,"  is  in  the  same  vein. 
A  swamp,  a  bog,  a  rut,  a  steep  hill,  stormy  oceans,  etc.  are 
veritable  protective  tariffs.  By  the  railroad,  the  steamship, 
etc.  we  do  all  we  can  to  remove  the  other  obstacles  ;  but  the 
artificial  obstacle,  which  it  will  cost  nothing  to  remove,  we 
suffer  to  remain.  Why  do  we  suffer  it  to  remain  ?  Because 
we  believe  that  this  particular  obstacle  to  intercourse  is  not 
an  obstacle,  but  an  aid,  to  acquiring  opulence.  Whether  it 
is  or  is  not  so  cannot  be  determined  by  giving  it  the  same 
name,  putting  it  in  the  same  class,  with  other  things  which 
we  recognize  as  pernicious.  If  there  were  a  tunnel  formed 
between  England  and  France,  it  would  not  be  absurd  to  take 
such  measures  as  would  prevent  its  being  used  for  the  pas- 
sage of  hostile  forces.  When  we  build  railroads  and  steam- 
ships,  we  do  not  logically  bind  ourselves  to  allow  them  to  be 
used  for  every  conceivable  purpose,  whether  useful  or  per- 
nicious ;  and  the  fact  that  the  railroad  or  the  steamship  may 
be  made  to  subserve  a  certain  purpose,  affords  no  ground  for 
inferring  that  such  purpose  is  or  is  not  desirable.  This  must 
be  ascertained  by  quite  another  sort  of  logic.  Opium  and 
rum,  the  smallpox  and  the  yellow  fever,  are  not  necessarily 
beneficial  because  distributed  by  steamships  and  railroads. 

Chapter  XI.  is  entitled  "  Absolute  Prices."     He  says  :  — 

3 


18  REVIEW   OP   BASTIAT'S   SOPHISMS    OF   PROTECTION. 

"  If  we  wish  to  judge  between  freedom  of  trade  and  protection,  to 
calculate  the  probable  effect  of  any  j^olitical  phenomenon,  we  should 
notice  how  far  its  influence  tends  to  the  production  of  abundance  or 
scarcity.  We  must  beware  of  trusting  to  absolute  prices ;  it  would 
lead  to  inextricable  confusion." 

He  assumes  throughout  the  chapter  that  protection  pro- 
duces scarcity,  and  free-trade  abundance.  Cases  might  exist 
where  it  would  do  so.  Generally  it  does  the  reverse,  and  it 
is  notably  so  in  the  United  States.  Why  is  this  ?  Because, 
when  the  population  is  fully  occupied,  much  is  produced  ; 
there  is  much  to  divide.  When  a  considerable  proportion  is 
unoccupied,  little  comparatively  is  produced ;  there  is  less  to 
divide.  We  saw  the  latter  from  1873  to  1879  :  wages  and 
profits  were  both  low.  We  see  the  former  now  in  1881  : 
the  people  are  more  fully  occupied,  and  both  wages  and 
profits  are  higher.  The  tariff  has  been  the  same.  The 
difference  has  arisen  from  the  abandonment  in  1873  of  the 
active  formation  of  instruments,  and  from  the  resumption  of 
the  movement  in  1880.  But  the  larger  production  is  con- 
comitant with  high  prices,  and  the  smaller  production  was 
concomitant  with  low  prices.  Cheapness,  then,  may  exist 
without  abundance,  and  abundance  may  exist  without  cheap- 
ness, however  much  this  may  astonish  the  free-trader. 

Chapter  XII.  is  entitled,  "  Does  Protection  raise  the  Rate 
of  Wages  ?  " 

M.  Bastiat  says  to  the  working-man:  — 

"  ^ni  justice,  simple yMSi/ce,  —  nobody  thinks  of  rendering  you  this. 
For  would  it  not  be  just  that  after  a  long  day's  labor,  when  you  have 
received  your  little  wages,  you  should  be  permitted  to  exchange  them 
for  the  largest  possible  sum  of  comforts  that  you  can  obtain  voluntarily 
from  any  man  whatsoever  upon  the  face  of  the  earth?" 

M.  Bastiat  put  himself  forward  as  a  logician,  and  also  as  a 
sincere  expositor  of  truth.  He  desired  and  intended,  so  he 
implied,  to  teach  the  truth,  the  whole  truth,  and  nothing  but 
the  truth  ;  and  yet  we  here  have  him  commencing  his  argu- 
ment from  the  middle  of  the  economical  fact  he  was  examin- 


EEVIEW   OF   BASTIAT'S   SOPHISMS   OF   PROTECTION.  19 

ing.  He  commences  with  the  poor  laborer  when  he  has  got 
his  little  wages :  then,  truly,  it  would  be  well  for  him  to  get 
as  much  in  exchange  for  them  as  possible.  But  M.  Bastiat 
carefully  keeps  out  of  sight  that  it  is  the  protective  policy 
which  has  given  the  man  his  employment,  and  consequently 
his  wao-es.  M.  Bastiat  may  have  believed  that  the  man 
would  get  as  good  or  better  employment  under  a  regime  of 
free-trade  ;  but  if  so,  that  was  the  point  at  issue.  To  assume 
it  would  seem  to  show  M.  Bastiat  to  have  been  more  anxious 
to  gain  his  point  than  to  ascertain  the  truth. 
M.  Bastiat  continues  : — 

"  Is  it  true  that  protection,  which  avowedly  raises  prices,  and  thus 
injures  you,  raises  proportionately  the  rate  of  wages?" 

Here  is  the  same  rhetorical  trick  repeated.  It  is  assumed 
that  the  man  will  get  work  under  free  trade  the  same  as 
under  a  protective  policy.  To  assume  this  is  to  take  the 
whole  free-trade  theory  for  granted,  without  any  proof  or 
argument.  M.  Bastiat,  however,  to  give  everyone  his  due, 
seems  really  to  believe  he  is  right ;  and  he  sometimes  does 
argue  the  question  effectively  from  the  premises  which  he 
assumes.  These,  however  (unfortunately  for  free-trade  phil- 
osophy), are  simple  blunders.  They  are  venerable  blunders, 
it  is  true,  as  they  can  claim  the  respectable  paternity  of 
Adam  Smith  more  than  a  hundred  years  ago ;  but  they  are 
very  evident  blunders  for  all  that.  We  may  borrow  here 
Quinctilian's  chaiitable  remark  about  Homer,  and  say,  "  Some- 
times the  good  Adam  Smith  nods,"  Unfortunately,  he  nod- 
ded at  a  very  important  point ;  and  he  did  the  sleeping  scene 
so  naturally  and  effectively  in  his  pages  that  every  free- 
trade  economist  for  a  century  and  over  has  fallen  into  a 
slumber  just  where  he  did. 

Bastiat  says  : — 

"  The  rate  of  wages  depends  upon  the  proportion  which  the  supply 
of  labor  bears  to  the  demand." 

Very  true.     He  continues  thus  : — 


20  REVIEW   OF   BASTIAT'S   SOPHISMS  OF  PROTECTION. 

"  On  what  depends  the  demand  for  labor  ?  On  the  quantity  of  dis- 
posable national  capital.  And  the  law  which  says  '  Such  or  such  an 
article  shall  be  limited  to  home  production,  and  no  longer  imported 
from  foreign  countries,'  can  it  in  any  way  increase  that  capital  ?  Not 
in  the  least.  The  law  may  withdraw  it  from  one  course,  and  transfer 
it  to  another ;  but  cannot  increase  it  one  penny.  Then  it  cannot  in- 
crease the  demand  for  labor." 

This  is  the  fundamental  position  of  the  free  traders.  It  was 
taken  by  Adam  Smith  more  than  a  hundred  years  ago,  was 
repeated  by  Mr.  John  Stuart  Mill  some  thirty  years  ago, 
again  repeated  by  M.  Bastiat,  and  is  now  presented  to  the 
American  people  by  the  Free  Trade  League  of  New  York 
in  the  translation  of  M.  Bastiat's  "  Sophisms  of  Protection  " 
now  tinder  review.  If  this  position  can  be  maintained,  the 
free-trade  doctrine  stands.  If  it  cannot  be  maintained,  the 
free-trade  doctrine  falls.  It  has  been  already  examined  as 
presented  by  Adam  Smith,  and  again  examined  as  presented 
by  Mr.  Mill.  Let  us  now  examine  it  as  put  forward  by  M. 
Bastiat.  He,  of  course,  uses  the  word  "  capital "  in  the 
French  sense,  as  signifying  everything  which  can  be  used  to 
assist  or  support  labor ;  and  his  proposition  is  therefore 
somewhat  broader  than  that  of  the  English  authors,  who 
limited  the  words  to  the  funds  set  apart  for  the  support  of 
'productive  labor. 

To  get  at  the  bottom  of  this  question,  we  must  see  what 
is  the  normal  condition  of  an  industrial  community.  Evid- 
ently it  must  be  possessed  of  certain  industries.  A,  B,  C, 
D,  etc.  Let  us  examine  industry  A.  It  was  commenced  for 
the  sake  of  profit.  The  same  motive  led  to  its  increase  con- 
tinually, so  long  as  the  satisfactory  profit  was  attainable  ; 
but,  finally,  it  over-ran  the  market,  as  was  evidenced  by 
a  portion  of  its  products  remaining  unsold  (or  a  portion  of 
its  materials  remaining  unconverted  into  finished  products) 
by  reason  of  a  lack  of  demand.  The  producers  then  find  a 
portion  of  their  capital  locked  up,  either  in  finished  products 
or  in  unconverted  material,  or  in  both,  and  are  compelled  to 
cease  augmenting  their  production.  Some  stock  they  find  it, 
upon  the  whole,  convenient  to  carry  rather  than  be  unpre- 


REVIEW   OF   BASTIAT'S   SOPHISMS   OF   PROTECTION.  21 

pared  for  fluctuations  in  the  demand  ;  and  they  naturally 
carry  as  large  a  stock  as  they  can  without  reducing  profits 
below  the  point  which  satisfies  the  existing  "  effective  de- 
mand for  accumulation."  Industry  A,  then,  normally  car- 
ries on  a  certain  stock  of  products,  and  this  stock  locks  up  a 
portion  of  the  capital  employed  in  the  industry.  This  stock 
is  unemployed  capital,  and  is  recognized  as  such  by  Mr,  John 
Stuart  Mill,  who,  however,  failed  to  observe  the  significance 
of  the  fact,  or  its  important  bearing  upon  economical  reason- 
ing. What  is  true  of  industry  A  is  true  of  B,  C,  D,  and 
all  the  others  acquired  by  the  community,  which  thus  is  seen 
to  contain  a  multitude  of  industries,  whose  aggregate  stocks 
of  finished  products  and  materials  compose  the  aggregate 
unemployed  capital  of  the  community.  It  is  the  function  of 
this  unemployed  capital  to  regulate  the  movement  of  in- 
dustry. When  the  stocks  increase,  they  enforce  a  slower 
movement ;  when  they  are  diminished,  prices  rise,  and  the 
industrial  movement  is  stimulated  to  greater  activity.  We 
come,  then,  inevitably  to  the  conclusion  that  in  an  industrial 
community  the  increase  of  industry  is  not  limited  by  capital, 
but  that  the  increase  of  both  industry  and  capital  is  limited 
by  the  "  field  of  employment." 

But  what  limits  the  field  of  employment  ?  Evidently,  the 
limits  which  exist  to  effective  demand.  Let  us  confine  our 
attention  to  a  single  industry,  say  the  shoe  manufacture. 
The  desire  of  men  for  shoes  is  in  itself  limited.  If  they 
could  be  had  without  effort  or  sacrifice,  a  certain  number  of 
human  beings  would  use  only  a  certain  number  of  shoes. 
Interpose  a  difficulty  of  attainment,  the  necessity  for  effort 
or  sacrifice,  and  less  will  be  used.  There  is,  then,  a  limit  to 
the  shoe  manufacture,  even  in  a  community  where  every 
person  could  find  a  sale  for  his  labor  if  he  desired  to  find 
one  ;  and  the  field  is  narrowed  still  further  if  a  portion  of 
the  community  is  not  able  to  find  employment.  Evidently, 
only  a  certain  number  of  shoes  can  be  profitably  made  at 
any  cost  you  choose  to  fix  upon.  Reduce  profits  ever  so 
low,  and  still  the  manufacture  has  its  limits.  Increase  now 
the  aggregate  means  of  the  community  for  the  purchase  of 


22         REVIEW  OP  bastiat's  sophisms  of  protection. 

shoes,  whether  by  increasing  the  population  or  by  increasing 
the  proportion  of  the  population  which  can  find  a  sale  for  its 
labor,  and  the  demand  for  shoes  will  increase,  their  exchange- 
able value  will  rise,  the  profits  of  the  manufacture  will 
augment,  and  it  will  be  enlarged  to  meet  the  changed  con- 
ditions. It  will  find  its  new  limits  in  the  production  which 
again  reduces  the  exchangeable  value  of  shoes  to  tliat  point 
where  the  profits  fall  to  the  rate  usual  in  the  community. 
The  moment  profits  are  such  as  to  enable  the  manufacturers 
to  save,  and  add  to  their  capital  an  annual  percentage, 
greater  than  that  by  which  the  population  increases,  they 
will  increase  their  production  faster  than  the  population 
increases  ;  when  profits  are  less,  they  will  allow  the  popu- 
lation to  gain  upon  the  production.  There  is,  evidently,  a 
limit  to  the  field  of  employment  open  to  this  industry.  It 
will  be  wider  under  certain  circumstances,  narroAver  under 
others.  But  it  is  this  limit, —  the  limit  of  the  field  of  employ- 
ment,—  which  regulates  both  the  quantity  of  labor  and  the 
quantity  of  capital  which  will  be  employed  in  it.  But  what  is 
true  of  shoes  is  true  of  every  other  commodity,  and  of  every 
service  known  to  the  community.  It  would  seem,  then,  that 
the  normal  condition  of  an  improving  community  was  this. 
Skill,  dexterity,  judgment,  machinery  are  constantly  dimin- 
ishing the  sacrifice  at  which  men  can  procure  the  commodities 
produced  by  its  industries ;  but  they  are  also  constantly  in- 
creasing the  mass  of  unemployed  capital,  and  forcing  it  to 
search  for  new  commodities  and  new  services,  which  may 
tempt  the  capitalists,  great  and  small,  to  increase  their  con- 
sumption, so  as  to  keep  pace  with  the  increasing  capacity  for 
production.  Each  new  commodity,  convenience,  and  amuse- 
ment furnishes  a  new  market  for  the  existing  industries,  and 
enlarges  the  effective  demand.  The  field  of  employment  is 
increased,  the  people  are  more  fully  occupied,  the  gross 
annual  product  is  augmented,  and  the  purposes  to  M'hich  an 
additional  fixed  and  floating  capital  can  be  applied  are  mul- 
tiplied. This  is  a  society  in  which  the  introduction  of  a  new 
industry  finds  ample  unemployed  capital  for  its  development, 
and  in  which  its  products  immediately  enlarge  the  market 


REVIEW   OP   BASTIAT's   SOPHISMS   OF   PROTECTION.  23 

for  the  products  of  the  old  industries,  and  enable  them  to 
increase  their  production  and  the  capital  employed  by  them. 

The  normal  condition  of  the  society  imagined  by  Adam 
Smith,  and  by  John  Stuart  Mill  in  his  first  volume,  and  by 
Bastiat,  is  one  where  the  field  of  employment  is  checked  by 
the  want  of  capital.  Deductive  reasoning  leads  us  to  the 
conviction  that  they  put  the  cart  before  the  horse  ;  to  the 
conviction  that,  on  the  contrary,  it  is  capital  which  is  limited 
by  the  limitation  of  the  field  of  employment.  Introduce  the 
new  industry,  and  the  capital  necessary  for  its  development 
will  be  found  waiting  for  the  work,  and  will  be  rapidly  repro- 
duced and  more  than  reproduced  by  the  augmented  activity 
of  the  previously  acquired  industries.  There  will  be  a  de- 
mand for  more  labor,  and  the  increased  annual  product  will 
reward  the  labor  with  higher  wages. 

Pure  reasoning  would  have  led  to  the  conclusion  that  in  a 
community  possessed  of  a  considerable  variety  of  industries 
there  must  be  an  enormous  aggregate  of  commodities  unsold 
or  unconverted,  or,  in  other  words,  of  unemployed  capital ; 
and  an  inquiry  in  Wall  Street  or  State  Street  would  have  re- 
vealed that  such  was  the  fact.  The  free  traders  missed  the 
fact,  because  they  did  not  stop  to  reason,  but  preferred  to 
jump  at  conclusions. 

M.  Bastiat's  assertion,  then,  that  a  protective  law,  which 
says  such  or  such  an  article  shall  be  limited  to  home  produc- 
tion, cannot  increase  disposable  capital  a  single  penny  is  simply 
a  blunder.  It  can  increase  it  in  the  United  States  many  hun- 
dred millions  of  dollars  a  year.  The  surplus  stocks  of  the 
existing  industries  will  immediately  supply  the  capital  re- 
quired, and  will  be  replaced  in  an  exceedingly  short  time  by 
the  stimulated  activity  of  those  industries ;  and,  meanwhile, 
the  people  will  have  had  paid  to  them  for  labor  about  twice  the 
amount  of  capital  invested  in  the  new  industry.  Take  the 
following  as  an  illustration.  Let  us  suppose  that  a  country 
exists  (call  it,  if  you  please,  the  United  States)  where  the 
annual  product  is  six  thousand  millions  of  dollars,  and  the 
normal  surplus  stock  of  commodities  is  equal  to  a  consump- 
tion of  sixty  days,  • —  a  value  of  about  one  thousand  millions. 


24  REVIEW   OF  BASTIAT's   SOPHISMS   OF   PROTECTION. 

We  will  suppose  that  it  uses  largely  of  woollen  goods  pro- 
cured from  abroad.  The  peoj)le,  looking  round,  perceive  that 
the  climate  is  in  no  way  unfavorable  to  the  woollen  industry ; 
that  they  themselves  are  by  no  means  wanting  in  general 
aptitude  to  mechanical  and  manufacturing  industries;  that 
there  is  every  reason  to  suppose  the  requisite  skill  can  be 
attained  ;  and  that  well-directed  efforts  to  import  the  industry 
will  end  in  our  producing,  here,  close  at  hand,  as  good  or 
better  cloths  at  a  somewhat  lower  cost  of  labor  and  abstinence 
than  they  cost  when  imported  from  abroad.  Accordingly  the 
people  say,  let  a  law  be  passed  giving  a  protection  of  say  fifty 
per  cent  to  woollens.  The  law  is  passed,  and  here  and  there 
all  over  the  country  woollen  mills  are  commenced  by  the 
combined  capital  of  a  multitude  of  individuals.  Gradually, 
as  the  mills  are  built,  they  pay  in  their  subscriptions.  Some 
draw  out  of  the  savings  banks,  which  hold  over  a  thousand 
millions ;  some  have  money  with  other  banks  or  bankers,  the 
deposits  with  whom  exceed  another  thousand  millions ;  some 
sell  stocks  or  property.  Twenty  millions  a  month  over  the 
whole  country  will  not  make  a  ripple  in  the  money  market. 
Suppose,  then,  the  operations  are  to  the  extent  of  twenty 
millions  a  month.  As  soon  as  gathered  in  they  are  paid  out 
for  labor  and  spent  by  labor  in  buying  commodities.  The 
producers  of  commodities  now  find  their  stocks  diminishing, 
—  that  is,  a  part  of  their  unemployed  capital  is  set  free.  They 
will  know  this  if  the  free-trade  philosophers  do  not,  and  they 
will  employ  more  labor  to  meet  the  increased  demand  for 
commodities.  They  will  be  able  to  pay  out  twenty  millions 
a  month  more  for  labor,  and  this  will  bring  about  an  addi- 
tional production  of  more  than  forty  millions,  —  more  than 
sufficient  to  pay  for  the  additional  labor  and  the  construction 
of  the  woollen  mills  besides.  This  is  warranted  by  the  facts 
given  in  the  United  States  Census  for  1870,  which  showed 
that  the  mechanical  and  manufacturing  industries  in  the 
United  States  added  $1,744,000,000  to  the  value  of  the  mate- 
rial used,  and  that  of  this  $776,000,000  went  to  labor.  It 
would  seem,  then,  that  $240,000,000  a  year  would  be  invested 
in  woollen  mills  in  the  year  without  diminishing  the  floating 


REVIEW   OF   BASTIAT'S   SOPHISMS   OF  PROTECTION.  25 

capital  of  the  country  a  cent.  At  the  end  of  the  year  the 
country  will  have  woollen  mills  which  cost  $240,000,000  as 
an  addition  to  its  fixed  capital,  and  the  laboring  classes  will 
have  had  $480,000,000  additional  to  spend.  The  investors 
in  mills  will  have  withdrawn  $240,000,000  from  the  monied 
reserves,  but  the  master  mechanics  and  manufacturers  will 
have  added  an  equal  or  somewhat  larger  amount.  The  nation 
altogether  will  be  richer  by  $240,000,000  in  the  shape  of 
woollen  mills,  although  it  has  had  and  spent  $480,000,000 
more  within  the  year ;  and  this  is  the  result  of  giving  fuller 
occupation  to  the  people.  More  commodities  are  made  and 
there  are  more  consumed. 

This  is  the  effect  of  the  law  which  Bastiat  says  cannot 
add  a  single  cent  to  the  wages  of  labor.  Let  business  men, 
who  understand  accounts,  examine  the  above  theory  of  the 
protectionists,  and  compare  it  with  the  theory  of  the  free- 
traders, and  then  decide  Avhich  represents  and  explains  the 
actual  course  of  financial  affairs  as  they  go  on  continually 
before  our  eyes,  and  which  ought  to  be  taught  to  young  men 
who  are  preparing  for  practical  life. 

Bastiat  says  that  "  when  a  nation  isolates  itself  by  the  pro- 
hibitive system,  its  number  of  industrial  pursuits  is  certainly 
multiplied,  but  their  importance  is  diminished.  In  propor- 
tion to  their  number  they  become  less  productive,  for  the  same 
capital  and  same  skill  are  obliged  to  meet  a  greater  number 
of  difficulties.  The  fixed  capital  absorbs  a  greater  part  of 
the  circulating  capital ;  that  is  to  say,  a  greater  part  of  the 
funds  destined  to  the  payment  of  wages. 

Was  this  a  man  capable  of  teaching  the  people  of  the  United 
States?  "isoZa^e  "  is  a  good  piece  of  rhetoric.  The  abomi- 
nable, absurd,  suicidal,  ridiculous,  impoverishing  tariff  of  the 
United  States  has  so  "  isolated "  the  nation  that  it  sends 
abroad  for  sale  an  annual  value  of  about  nine  hundred  mil- 
lions, and  keeps  five  or  six  times  as  much  at  home.  It  is  so 
poor  that  its  average  annual  individual  income  exceeds  that 
of  any  other  country  in  the  world,  not  even  excepting  Great 
Britain.  It  has  on  its  hands  no  starving  Ireland,  no  starving 
Orissa,  no  starving  Behar ;  nor  would  it  have  were  those 

4 


26  REVIEW   OF   BASTIAT's    SOPHISMS    OP   PROTECTION. 

countries  transferred  to  its  dominion.  For  "starving"  would 
then  have  to  be  substituted,  in  every  case  the  words  "flour- 
ishing," "contented,"  "prosperous;"  for  they  would  be 
protected  from  hostile  industries  as  much  as  from  hostile 
armies. 

M.  Bastiat  imagined  that  a  new  industry  would  be  estab- 
lished by  capital  drawn  from  the  old  industries,  which  would 
be  thus  cramped  and  diminished,  whereas  the  new  industry 
would  be  established  and  equipped  by  capital  already  existing, 
and  replaced  during  the  period  of  its  introduction  by  labor 
which  would  otherwise  have  been  unemployed  ;  and  its  prod- 
ucts, when  established,  constitute  an  additional  market  for 
the  products  of  the  old  industries,  enabling  them  all  to  increase 
their  production. 

The  writer  might  try  to  drag  the  reader  through  the  rest 
of  the  review,  chapter  by  chapter  ;  but  it  has  been  long  since 
wisely  observed  that  humanity  is  the  best  policy :  the  porten- 
tous length  of  the  article  might  be  thought  disproportionate 
to  the  importance  of  the  author,  and  might  insure  that  no 
part  of  it  would  ever  be  read.  And  it  is  not  necessary  to 
protract  the  examination.  The  remaining  chapters  are  only 
variations  upon  the  same  ideas,  which  are  twisted  and  turned 
and  distorted  and  made  to  stand  on  their  heads  and  peep  out 
from  between  their  own  legs  in  a  manner  marvellous  to  con- 
template, but  in  no  way  either  instructive  or  amusing.  The 
ideas  are :  — 

1.  That  industry  is  limited  by  capital,  whereas  both  are  lim- 

ited by  the  field  of  employment. 

2.  That  human  labor  is  never  without  employment. 

3.  That  the  w^ages  fund  is  a  fixed  amount,  equal  to  the  ex- 

isting capital,  and  the  whole  of  it  always  employed. 

4.  That  protective  laws,  which  cause  more  people  to  be  em- 

ployed with  increased  production,  are  the  same  in  effect 
as  dull  axes,  obstructed  canals,  working  with  the  left 
hand,  amputating  one  hand,  etc.,  which  would  cause 
more  people  to  be  employed  witJiout  increased  produc- 
tion. 


REVIEW   OF   BASTIAT's    SOPHISMS   OP   PEOTECTION.  27 

6.  That  inasmuch  as  many  obstacles  to  exchanges  are  also 
obstacles  to  opulence,  therefore  all  obstacles  to  exchanges 
are  obstacles  to  opulence. 

In  short,  the  argumentative  portion  of  the  book  displays 
a  neglect  of  every  canon  of  logic,  both  inductive  and  deduc- 
tive. The  rest  is  rhetoric,  and  is  good  of  its  kind,  —  witty, 
vivacious,  impressive,  and  well  suited  to  impose  upon  those 
who  are  not  quick-witted  enough  to  see  that  it  proves  noth- 
ing, and  is  totally  inapplicable  to  any  existing  society  or  to 
any  society  which  could  exist  while  man  is  constituted  as 
he  is. 

Common  sense  is  unconscious  logic  ;  logic  not  yet  intro- 
spective ;  logic  which  has  not  yet  named  its  processes,  but 
which  sees  and  casts  aside  a  blunder  intuitively ;  and  there 
is  too  much  of  this  sort  of  logic  in  the  brains  of  the  working 
people  of  America  to  allow  much  harm  to  come  from  such  a 
book  as  Bastiat's  "  Sophisms  of  Protection." 


REVIEW 

Of  Professor  Sumner's  article  in  the  March  number  of  the  Princeton  Review,  entitled,  —> 

"The  Argument  against  Peotective  Taxes." 


A  peotectionist  cannot  even  pass  by  the  title  without  ob- 
jection. A  tax  is  not  necessarily  a  burden.  If  the  money 
be  well  and  economically  expended,  and  gives  us  good  roads, 
good  water-works,  good  police,  and  good  government  at  what 
they  ought  to  cost,  then  a  tax  is  a  great  blessing  and  sav- 
ing; but,  unfortunately,  the  money  is  often  expended  reck- 
lessly and  foolishly,  and  so,  through  abuses,  the  very  name 
of  tax  becomes  offensive.  The  free-trader  who  writes 
about  "  Protective  Taxes  "  avails  himself  of  this  existing  pre- 
judice, with  the  effect  of  disgusting  the  reader  with  protection 
at  the  outset,  in  advance  of  all  argument  in  respect  to  it. 
The  word  tax  also  gives  two  false  impressions :  first,  that  /] 
all  protected  articles  cost  the  consumer  more  than  they  would 
if  not  protected ;  and,  second,  that  when  they  cost  more,  the 
consumer  gets  no  counterbalancing  or  greatly  overbalancing 
advantage.     In  this  sense  Professor  Sumner  writes  that, — 

"  Every  cent  paid  in  protective  taxes  lessens  the  power  of  the  cit- 
izen to  pay  revenue  taxes  for  the  discharge  of  the  public  burdens. 
Hence  the  fact  that  we  have  heavy  public  burdens  is  just  the  reason 
why  we  cannot  afford  to  squander  our  means  in  paying  taxes  to  our 
neighbors  for  carrying  on  (as  they  themselves  allege)  unproductive 
industries." 

This  argument  was  used  by  Adam  Smith  one  hundred  and 
thirty  years  ago  in  the  lectures  whicli  afterwards  were  thrown 
into  the  form  of  the  famous  "  Enquiry  into  the  Nature  and 
Causes  of  the  Wealth  of  jS'ations]  "  but  the  human  race  ought 


2  REVIEW   OF   PROFESSOR   SUMNER'S 

to  have  learned  something  in  one  hundred  and  thirty  years, 
and  it  has  been  many  times  shown,  or  at  all  events  is  easily 
shown,  that  where  a  protective  law  causes  labor  and  capital, 
otherwise  not  occupied,  to  produce  an  article  for  11.25  which 
could  be  imported  for  $1.00,  the  nation  does  not  lose  twenty- 
five  cents  but  gains  the  dollar.  The  tax  gives  to  the  totality 
of  consumers  five  times  what  it  takes  from  them.  To  this 
it  may  be  replied  that  labor  never  need  be  unoccupied  where 
there  is  much  land  to  be  had  for  the  asking,  that  it  can 
always  go  to  farming  ;  but  here  comes  in  the  fallacy  of  sup- 
posing that  when  we  all  went  to  farming  there  would  be  the 
same  favorable  market  for  our  products  that  exists  now. 
Agriculture,  it  is  true,  is  the  field  in  which  we  have  the 
greatest  advantage  over  Europe  ;  but  we  might  easily  have 
so  pressed  the  cultivation  of  this  field  as  to  have  transferred 
the  whole  advantage  to  Europe  and  have  kept  no  part  of  it 
for  ourselves,  —  to  have  been  compelled  to  eat  Indian  corn 
and  rye,  while  we  exported  our  wheat  to  buy  a  very  small 
modicum  of  conveniences.  We  have  had  wisdom  enough 
to  stop  short  of  this  supreme  folly,  by  turning  a  portion 
of  our  population  upon  other  fields  in  which  we  are  at  some 
disadvantage  as  compared  to  Europe  ;  and,  by  doing  so,  we 
have  made  the  whole  body  of  our  labor  vastly  more  produc- 
tive,—  more  productive  per  man  than  that  of  any  other  coun- 
try in  this  planet.  Here  a  free-trader  would  point  out  some 
particular  article  which — perhaps  only  for  the  moment,  but 
perhaps  even  permanently — costs  in  wheat,  at  the  present 
price  of  wheat,  more  than  it  could  be  imported  for ;  and  he 
says  to  the  individual  farmer:  "  See  how  much  more  cheaply 
you  could  get  this  from  abroad !  "  and  he  persuades  the  farmer 
(and  himself  too)  that  the  fact  is  the  same  with  regard  to 
every  article  ;  and,  even  then,  he  does  not  see  that  he  is  mis- 
leading himself  and  the  farmer  by  means  of  the  "fallacy 
of  division."  Farmer  A,  things  being  as  they  are,  could 
get  what  he  wants  through  wheat  somewhat  more  cheaply 
than  he  now  does ;  so  could  Farmer  B  ;  so  could  each  one 
of  the  others ;  but  they  all  of  them  together  cannot,  for  wheat 
would  fall  to  perhaps  half  its  present  price  and,  with  twice  as 


"  ARGUMENT    AGAINST   PROTECTIVE   TAXES."  3 

many  farmers,  only  a  very  small  portion  of  the  surplus  of 
wheat  would  be  salable  at  any  price.  Such  questions  are  prac- 
tical questions,  depending  upon  the  possible  foreign  demand 
and  the  population  of  the  country  in  question  ;  and  no  man 
who  carefully  considers  the  subject,  will  come  to  the  conclusion 
that  the  people  of  the  United  States,  if  confined  to  those  in- 
dustries in  which  we  have  an  advantage,  could  produce  any- 
thing like  the  gross  annual  exchangeable  value  they  are  now 
producing.  Here  it  may  be  urged  that  when  farming  ceased 
to  be  profitable,  the  other  industries  would  establish  them- 
selves naturally  and  healthfully  by  the  action  of  individual 
interests  ;  but  this  assumption  was  disposed  of  fifty  years  ago 
by  John  Rae.* 

In  his  opening  paragraph  Professor  Sumner  shows  very  cor- 
rectly that  it  is  absurd  to  say  that  free  trade  may  be  good 
in  theory  but  not  in  practice.  Theory  must  be  competent 
to  explain  observed  facts,  or  it  is  no  true  theory ;  or  at  all 
events  lies  under  grievous  suspicion  of  being  faulty  in  some 
undiscovered  point.  Professor  Sumner  reads  it  the  other 
way,  namely,  that  no  one  can  be  sure  of  facts  unless  he  be  able 
to  disentangle  every  train  of  argumentation,  claiming  to  be 
theory,  which  seems  to  contradict  the  facts  or  show  them 
to  be  impossible.  Adam  Smith,  more  than  a  hundred  years 
ago,  argued  thus:  — 

"  The  general  industry  of  the  society  never  can  exceed  what  the 
capital  of  the  society  can  employ.  As  the  number  of  workmen  that 
can  be  kep^  in  employment  by  every  particular  person  must  bear 
a  certain  proportion  to  his  capital,  so  the  number  of  those  that  can 
be  continually  employed  by  all  the  members  of  a  great  society  must 
bear  a  certain  proportion  to  the  whole  capital  of  that  society,  and 
never  can  exceed  that  proportion.     No  regulation  of  commerce  can 

*  Rae  shows  very  conclusively  that  an  individual  actinaj  wisely  for  his  own 
interests  could  never  undertake  the  introduction  ot  Ibreign  arts  except  in  the 
very  rare  cases  where,  with  assistance,  such  arts  might  have  been  domesticated 
with  advantage  at  a  much  earlier  date. 

Besides,  it  seems  certainly  wiser  to  pain  the  foreign  arts  by  a  system  which 
keeps  agriculture  profitable,  than  to  wait  until  stern  necessity ywces  the  ruined 
farmer  to  betake  himself  to  other  employments. 


4  REVIEW   OF   PROFESSOR    SUMNER'S 

increase  the  quantity  of  industry  in  any  society  beyond  what  its  capital 
can  maintain.  It  can  only  divert  a  part  of  it  into  a  direction  into 
which  it  might  not  otherwise  have  gone ;  and  it  is  by  no  means  cer- 
tain that  this  artificial  direction  is  likely  to  be  more  advantageous 
to  the  society  than  that  into  which  it  would  have  gone  of  its  own 
accord." 

Thirty  years  ago  Mr.  John  Stuart  Mill  repeated  this  argu- 
ment, with  variations,  thus:  — 

"  There  can  be  no  more  industry  than  is  supplied  with  materials 
to  work  up  and  food  to  eat.  Self-evident  as  the  thing  is,  it  is  often 
forgotten  that  the  people  of  a  country  are  maintained  and  have 
their  wants  supplied,  not  by  the  produce  of  present  labor  but  of  past. 
They  consume  what  has  been  produced,  not  what  is  about  to  be  pro- 
duced. Now  of  what  has  been  produced,  a  part  only  has  been  allotted 
to  the  support  of  productive  labor;  and  there  will  not  and  cannot 
be  more  of  that  labor  than  the  portions  so  allotted  (which  is  the 
capital  of  the  country)  can  feed  and  provide  with  the  materials  of 
production." 

"  Yet,  in  disregard  of  a  fact  so  evident,  it  long  continued  to  be  be- 
lieved that  laws  and  governments,  without  creating  capital,  could 
create  labor." 

In  the  article  under  review,  Professor  Sumner  repeats  and 
varies  the  argument  thus :  — 

"  Any  favor  or  encouragement  which  the  protective  system  exerts 
on  one  group  of  its  population  must  be  won  by  an  equivalent  oppres- 
sion exerted  on  some  other  group.  To  suppose  the  contrary  is  to  deny 
the  most  obvious  application  of  the  conservation  of  energy  to  economic 
forces.  If  the  legislation  did  not  simply  transfer  capital  it  would  have 
to  create  capital  out  of  nothing..  Now  the  transfer  is  not  simply  an  equal 
redistribution ;  there  is  loss  and  waste  in  the  case  of  any  tax  whatso- 
ever. There  is  especial  loss  and  waste  in  the  case  of  a  protective  tax. 
We  cannot  collect  taxes  and  redistribute  them  without  loss ;  much 
less  can  we  produce  forced  monopolies  and  distorted  industrial  relations 
without  loss." 

This  is  the  theory  which  has,  for  one  hundred  and  thirty 
years,  deterred  men  from  trusting  either  their  eyes  and  ears,  or 


"  ARGUMENT    AGAINST   PROTECTIVE   TAXES."  5 

that  intuitive  reason  which  conducts  nine  tenths  of  human 
affairs.  Let  us  examine  the  reasoning.  First,  capital  is  defined 
to  be  those  funds  allotted  to  the  support  of  productive  labor ; 
then  it  is  said  that  there  cannot  be  more  industry  than  this 
capital  can  support.  These  two  propositions  together  affirm, 
then,  that  industry  never  can  be  greater  than  it  can  be,  —  an 
identical  proposition,  which  nobody  can  deny  to  the  end  of  time, 
but  which  does  not  and  cannot  convey  any  information  what- 
soever. It  leaves  the  whole  question  still  unsolved  before  us. 
It  is  very  true  that  the  industry  of  the  society  cannot 
be  greater  than  its  capital,  real  and  potential,  can  support ; 
but  what  we  are  concerned  to  know  is  whether  the  industry 
of  the  society  cannot  be  greater  than  its  capital  does  suj)port. 
If  the  normal  condition  of  an  industrial  community  be  one 
in  which  a  considerable  portion  of  its  capital  is  locked  up  in 
unsold  goods,  in  which  there  are  large  amounts  also  capable 
of  being  turned  on  the  instant  from  unproductive  to  produc- 
tive purposes,  then  a  protective  law  will  find  ample  means 
for  the  inauguration  of  its  new  industry 

To  Adam  Smith's  argument  above  quoted  it  has  been 
replied  that  — 

The  number  of  workmen  that  can  be  kept  in  employment 
by  any  particular  individual  does  not  bear  a  certain  pro- 
portion to  his  capital.  When  the  market  for  his  products 
is  dull,  a  large  part  of  his  capital  is  locked  up  in  unsold 
goods  ;  he  must  then  lessen  his  production  and  dismiss  some 
of  his  workmen  ;  and  the  same  is  true  of  society  taken  all  to- 
gether. In  a  normal  condition  of  things  there  may  be,  for 
instance,  a  stock  of  goods  equal  to  two  months'  consumption 
of  the  whole  community,  —  a  value  in  the  United  States 
at  the  present  time  (1881)  considerably  exceeding  one  thou- 
sand millions  of  dollars  ;  and  observe  that  these  stocks  of  com- 
modities are  the  very  thhigs  —  the  food,  the  raiment,  the  tools, 
&c. —  which  are  requisite,  and  in  fact  used,  in  carrying  out 
new  undertakings  ;  and,  besides  these,  there  are  also  immense 
sums  lying  in  the  banks  awaiting  investment.  The  proposition, 
then,  that  industry  never  can  exceed  what  the  capital  of  the 
society  can  support,  is  totally  irrelevant.     It  never  can,  for 


6  .  EEVIEW   OP   PROFESSOR    SUMNER'S 

any  considerable  time,  be  nearly  as  great  as  the  capital  can 
support ;  for,  if  it  were,  there  would  be  no  stock  of  commod- 
ities, and  this  would  cause  such  high  prices  and  such  high 
rates  of  interest  as  must  check  consumption  on  the  one  hand, 
and  quicken  production  on  the  other. 

One  half  of  the  capital  normally  unemployed  is  ample  for 
the  inauguration  of  gigantic  enterprises  ;  and  these,  if  within 
the  strength  of  the  community,  will  not  prevent  anything 
being  done  which  would  otherwise  have  been  done.  On  the 
contrary,  the  previously  existing  industries  will  be  stimulated 
to  larger  production. 

Let  us  suppose  that  the  United  States  at  the  end  of  1879 
was  producing  and  consuming  commodities  equal  to  a  value 
of  six  thousand  millions  for  the  year,  with  a  surplus  stock 
equal  to  the  value  of  one  thousand  millions.  The  bank  de- 
posits of  money  are  known  to  exceed  one  thousand  milhons. 
If,  at  that  time,  they  commenced  forming  new  instruments 
(mills,  forges,  farms,  houses,  railroads,  &c.)  to  the  annual 
value  of  three  hundred  millions  over  and  beyond  the  regular 
and  normal  movement,  there  would  be,  as  we  see,  one  thousand 
millions  of  unemployed  floating  capital,  and  immense  moneyed 
reserves,  to  answer  to  the  subscribed  funds ;  but  these 
subscriptions  would  go  to  recompense  the  producers  of  the 
new  instruments,  and  would  be  by  them  expended,  for  the 
most  part,  for  commodities,  —  thus  relieving  the  capitalists  of 
a  portion  of  their  stocks,  and  placing  them  in  a  j)Osition 
to  employ  more  labor  for  the  sake  of  enlarging  their  i^roduc- 
tion  of  commodities.  But  whatever  they  thus  expended 
in  labor  would  lead  to  the  production  of  more  than  twice 
the  value  expended  in  labor,  as  is  shown  by  the  returns  of  the 
census  of  1870.  This  gives  the  total  value  added  to  materials 
by  the  manufacturing  and  mechanical  industries  of  the 
United  States  as  1,744  millions,  of  which  776  millions  went 
directly  to  labor.  It  might  well,  then,  have  happened  that 
at  the  end  of  1880  the  gap  made  in  the  stock  of  unemployed 
floating  capital  was  quite  repaired,  and  the  country  as  ready 
to  continue  a  similar  movement  in  1881  as  it  was  to  com- 
mence it  a  year  before.     Meanwhile  the  extra  recompense 


"  ARGUMENT    AGAINST    PROTECTIVE    TAXES."  7 

to  labor  during  the  year  might  have  been  not  less  than  six 
hundred  millions. 

Vary  the  amounts  as  you  please,  but  you  will  find  that 
any  new  enterprise,  not  out  of"  proportion  to  the  existing  sur- 
plus stock  of  commodities,  will  result,  first,  in  an  enlarged 
employment  of  laborers;  and  second,  in  the  creation  of  new 
subsidiary  capital, —  or,  say  rather,  of  new  instruments  of  pro- 
duction, which  would  not  otherwise  have  come  into  exist- 
ence. But  a  free-trader  may  aslv :  How  do  you  know  that 
there  is  any  surplus  stock  of  commodities?  And  we  should 
reply  that,  in  the  first  place,  we  know  it  as  a  matter  of  fact, 
which  can  be  verified  in  State  Street  any  day  when  produc- 
tion and  consumption  are  in  their  normal  condition.  But, 
as  our  free-trade  brethren  do  not  like  facts,  nor  believe 
in  them  unless  they  agree  with  conclusions  deduced  from 
postulates  admitted  by  their  own  authors,  we  will  try  to  show 
that  in  an  industrial  community  there  must  be  normally 
a  stock  of  commodities  or  of  unemployed  capital. 

First,  then,  take  Industrj^  A.  Those  who  commenced  it 
did  so  for  the  sake  of  profit.  But  so  long  as  they  obtained 
a  satisfactory  profit,  the  same  motive  would  lead  them  to  en- 
large their  production.  If  one  man  did  not,  another  would ; 
and  so  the  increase  of  the  industry  would  go  on  until  it  over- 
ran the  demand.  A  stock  would  then  accumulate,  bringing 
down  profits  and  locking  up  a  portion  of  the  producers' 
capital  at  the  same  moment.  But  what  is  true  of  Industry 
A,  is  true  of  B,  C,  D,  &c. ;  and  we  thus  arrive  at  the  conclu- 
sion that  each  carries  along  a  surplus  stock.  When  this 
stock  is  diminished  by  a  novel  or  increased  demand,  prices 
rise ;  when  the  stock  is  increased,  prices  fall,  and  the  indus- 
try is  checked. 

No  economist,  as  far  as  we  know,  has  noticed  the  vast 
aggregate  of  these  stocks,  nor  tlie  manner  in  which  tliey 
regulate  the  play  of  the  industrial  forces ;  and  yet,  without 
knowing  about  them,  it  is  impossible  to  understand  wliat 
happens  upon  the  commencement  of  a  great  war  or  of  a  great 
industrial  movement.  When  we  have  ascertained  what  the 
ordinary  average  stock  is,  whether  equal  to  two,  three,  or  more 


8  REVIEW    OF    PROFESSOR   SUMNER'S 

months'  consumption,  it  may  become  possible  to  form  a 
rational  opinion  as  to  how  far  any  industrial  movement  can 
be  pushed  without  bringing  on  a  scarcity  of  floating  capital 
and  a  stringency  in  the  money  market ;  but,  meanwhile, 
it  is  something  to  have  satisfied  ourselves  that  such  stocks 
must  and  do  exist,  and  that  systems  framed  in  ignorance  or 
disregard  of  them  are  necessarily  erroneous. 

Such  a  system  is  that  of  Adam  Smith  in  his  third  para- 
graph above  quoted.  He  starts  with  the  self-evident  axiom 
that  "  the  general  industry  of  the  society  never  can  exceed 
what  the  capital  of  the  society  can  employ."  He  then  repeats 
the  idea,  in  different  words,  three  several  times  ;  and  then, 
mistaking  apparently  this  rhetorical  artifice  for  logic,  he 
draws  his  conclusion  that  "  a  regulation  of  commerce  can 
only  divert  a  portion  of  the  capital  of  the  society  into  direc- 
tions into  which  it  might  not  otherwise  have  gone."  This 
conclusion  will  follow  from  his  axiom  whenever  an  industrial 
community  shall  be  found  in  which  there  exists  no  unem- 
ployed capital,  and  no  funds,  which,  though  originally  in- 
tended for  private  expenditure,  are  capable  of  being  diverted 
to  the  support  of  productive  labor,  the  moment  a  protective 
law  affords  a  sufficient  motive  for  doing  so. 

Professor  Sumner's  argument  appears  to  be  only  a  varia- 
tion of  that  of  Adam  Smith  and  Mr.  J.  S.  Mill.  He  ureses 
that  if  a  law  can  do  anything  more  than  transfer,  to  the  pro- 
tected industry,  capital  that  was  or  would  have  been  applied 
to  some  of  the  old  industries,  then  the  law  must  create  capital 
out  of  nothing. 

This  would  be  true  if  in  civilized  communities  there  were 
no  capital  seeking  investment  (a  portion  of  the  one  thousand 
millions  of  bank  deposits),  and  no  capital  locked  up  in  com- 
modities awaiting  a  demand,  or  materials  delayed  in  conver- 
sion into  commodities  on  account  of  the  dulness  of  the  de- 
mand ;  but  it  would  seem  to  be  untrue  in  the  actual  world 
we  live  in. 

I  respectfully  invite  Professor  Sumner  to  examine  this 
matter  to  the  bottom,  and  see  whether,  in  his  theory,  he  does 
not  overlook  facts  which,  when  taken  into  account,  will  neces- 


"  ARGUMENT    AGAINST   PROTECTIVE   TAXES."  9 

sitate  another  and  very  different  theory.  It  is  true  that  the 
argumentation  on  which  his  theory  is  built  has  stood  more 
than  a  century  without  being  picked  to  pieces ;  but  the  doc- 
trine that  the  world  was  flat  stood  a  great  many  centuries. 
The  antiquity  of  an  argumentation,  the  fact  that  it  had  been 
found  satisfactory  by  three  or  four  generations,  was  sufficient 
to  warrant  its  acceptance  by  a  teacher  and  its  communica- 
tion to  pupils  ;  but  if  it  has  been  shown  to  be  erroneous, 
both  it  and  its  corollaries  ought  surely  to  be  abandoned 
forthwith. 

The  writer  has  no  pecuniary  bias  in  this  matter,  and  no 
desire  except  to  arrive  at  the  truth  ;  and  he  abhors,  as  much 
as  Professor  Sumner  can,  whatever  is  mystical,  misty,  indis- 
tinct, —  everything  in  short  which  will  not  stand  the  test  of 
the  most  minute  and  searching  examination. 

This  leads  me  to  object  (without  any  disrespect  to  Pro- 
fessor Sumner)  to  such  sentences  as  the  following  :  — 

"  We  cannot  collect  taxes  and  redistribute  them  without  loss ;  much 
less  can  we  produce  forced  monopoHes  and  distorted  industrial  rela- 
tions without  loss." 

Such  words  appear  to  me  to  mislead  both  writer  and 
reader.  They  assume  that  under  the  regime  of  free  compe- 
tition in  a  nation  of  fifty  millions  there  can  be  monopolies,  and 
they  assume  that  industrial  relations,  different  from  what 
would  arise  by  themselves,  are  productive  of  national  loss  ; 
and  these  assumptions  appear  to  me  to  take  for  granted  the 
doctrines  of  free  trade,  which  are  the  very  things  under 
discussion. 

Again,  Professor  Sumner  remarks  that  — 

"  The  notion  that  the  Legislature  has  a  wisdom  greater  than  that  of 
the  people,  and  can  point  out  the  industries  they  ought  to  pursue,  has 
been  often  refuted;  but  the  protective  theory  assumes  more  than  that; 
it  assumes  that  the  law  can  enlighten  the  desire  for  profit,  and  make 
it  a  more  trustworthy  guide  than  it  would  be  under  freedom." 

But  the  question  does  not  seem  to  be  whether  the  Legis- 
lature has  greater  wisdom  than  the  people,  but  whether  the 


10  REVIEW   OF    PROFESSOR   SUMNER'S 

untrammelled  action  of  each  individual  necessarily  produces 
the  best  possible  result, — such  as  cannot  be  improved  by  the 
collective  wisdom ;  whether,  in  short,  in  this  one  field  of 
human  affairs,  judgment  and  observation  and  study  are 
utterl}^  impotent  to  improve  the  accidental  or,  if  you  please, 
the  natural  course  of  events.  I  am  not  aware  that  the 
opinion  that  the  collective  action  of  the  whole  nation  may 
produce  advantageous  results  has  been  often  or  ever  refuted. 
The  most  persuasive  argument  in  favor  of  a  negative  decision, 
that  1  have  seen,  is  contained  in  the  Enquiry  into  the  Nature 
and  Causes  of  the  Wealth  of  Nations,  Book  IV.  chap.  11, 
§  4,  et  seq.f  and  it  is  very  persuasive ;  but  if  Professor  Sum- 
ner will  examine  it  narrowly,  and  apply  to  it  the  logic  which 
the  article  under  review  shows  him  to  be  master  of,  he  will 
see  the  supposed  demonstration  crumble  to  pieces.  To 
examine  it  in  this  article  would  exceed  the  limits  of  space 
and  the  patience  of  readers.  Protection  does  not,  I  think, 
presume  to  enlighten  the  desire  for  profit,  but  only  to  place 
within  the  reach  of  unoccupied  capital  and  labor  an  addi- 
tional field  of  employment  which  they  can  take  possession  of 
with  benefit  to  the  ivhole  community. 

In  the  foregoing  I  have  endeavored  to  show  where  and 
how  protection  exerts  an  effect  on  production,  to  increase  it. 
I  must  now  ask  the  indulgence  of  the  reader,  and  of  Professor 
Sumner,  while  I  endeavor  to  show  where  and  how  free  trade 
may  exert  an  effect  on  production,  to  diminish  it. 

Let  us  take  the  three  industries  of  cottons,  woollens,  and 
iron,  and  let  us  suppose,  for  the  sake  of  illustration,  that 
their  aggregate  product  sells  for  one  thousand  millions  ;  and 
let  us  farther  suppose,  for  the  sake  of  illustration,  that  the  same 
products  could  be  purchased  abroad  for  seven  hundred  mil- 
lions. The  gross  annual  product  of  the  United  States  I  find 
set  down  in  a  Free-Trade  Book,  ''  The  Balance  Sheet  of 
Nations,"  at  £1,400,000,000  sterling,  or  say  seven  thousand 
millions  of  dollars,  which  appears  to  be  not  an  unreasonable 
estimate. 

It  would  seem  that  this  seven  thousand  millions  must  pay  all 
rents,  all  profits,  all  wages ;  must  pay  all  productive  laborers, 


"  ARGUMENT    AGAINST   PROTECTIVE   TAXES."  11 

so-called,  and  all  recipients  of  salaries,  fees,  or  wages  for  ser- 
vices which  do  not  issue  either  in  commodities  or  in  instru- 
ments of  production.  It  would  seem  that  the  proportion  of 
the  gross  product  which  would  fall  to  any  capitalist  for  the  use 
of  his  particular  instrument  of  production,  or  which  would  fall 
to  any  salaried  man  for  the  services  he  renders,  must  depend 
upon  supply  and  demand;  e.  g.  upon  the  number  of  per- 
sons offering  to  give  instruction,  compared  with  the  demand 
of  the  community  for  that  much-honored  service.  Let  us  call 
the  share  of  the  gross  product  falling  to  any  one,  X.  Now  in 
the  cases  of  the  instructor,  the  clergyman,  the  lawyer,  the 
physician,  or  any  other  recipient  of  fees  or  salaries,  it  would 
seem  that  they  must  be  benefited  by  the  drawing  off,  into  the 
cotton,  woollen,  andiron  industries,  of  a  multitude  of  men  who 
would  otherwise  be  pressing  into  the  professions.  It  would 
seem  that  for  each  person  in  those  professions  the  share  repre- 
sented by  X  must  be  greater  by  reason  of  the  existence  of 
those  industries,  unless,  upon  their  suppression,  an  equal  field 
would  be  found  for  that  class  of  persons. 

But  the  three  industries  in  question  produce  (by  the  sup- 
position) one  thousand  millions,  or  one  seventh  part  of  the 
total  annual  product ;  that  is,  they  support  something  over 
seven  millions  of  people.  Every  dollar  gets  into  the  hands  of 
either  the  producers  of  commodities  and  instruments  of  pro- 
duction (capital),  or  else  into  the  hands  of  those  who  render 
services  —  every  dollar,  save  and  except  the  comparatively 
small  sum  expended  for  foreign  products.  Substantially,  the 
whole  one  thousand  millions  are  expended  for  other  American 
products  and  services,  and  the  amount  expended  for  services 
would  be  again  expended  for  commodities  or  for  capital ;  so 
that  in  the  end  the  thousand  millions  of  those  three  indus- 
tries would  be  paid  for  by  one  thousand  millions  of  other 
American  products. 

But,  by  the  supposition,  seven  hundred  millions  of  the  other 
American  products  would,  at  present  prices,  procure,  if  sent 
abroad,  the  same  amount  of  cottons  and  woollens  and  iron  now 
enjoyed  and  consumed.  Suppress  the  cotton  and  woollen  and 
iron  industries  and  —  if  the   exchangeable  value   of  our  oivn 


12  REVIEW   OF   PROFESSOR   SUMNER's 

products  remained  undiminished  when  offered  abroad  in  such 
greater  quantities,  and  if  also  the  exchangeable  value  of  foreign 
cottons,  woollens,  and  iron  remained  unenhanced  wlien  called 
for  in  such  great  quantities  —  we  should  thereafter  get  the  cot- 
tons and  woollens  and  iron  as  much  as  we  now  get  them,  but 
the  seven  millions  of  people,  supported  directly  and  indirectly 
by  the  three  industries,  would  be  without  means  of  support; 
they  would  then  have,  as  Mr.  Mill  expresses  it,  either  to  go 
without  food  and  necessaries,  or  squeeze  them  by  competition 
from  the  shares  of  other  laborers. 

But,  to  bring  about  even  this  result,  we  have  had  to  sup- 
pose that  the  addition  of  seven  hundred  millions  (to  our  pres- 
ent export  of  eight  or  nine  hundred  millions)  would  not  depress 
the  exchangeable  value  of  the  whole.  If  it  did  dej)ress  it,  even 
fifteen  per  cent,  then  our  cottons  and  woollens  and  iron  would 
cost  as  much  as  now,  and  leave  us  our  seven  millions  of  unoccu- 
pied people  besides  ;  and,  if  the  foreign  iron  and  woollens  and 
cottons  advanced  in  exchangeable  value,  we  should  be  worse 
off  still.  But  it  has  been  urged  that  the  seven  millions,  or 
those  who  support  the  seven  millions,  would  find  occupation 
about  "  something  else  —  "  that  they  would  build  houses  and 
wagons,  &c. ;  but  the  effective  demand  of  the  community  for 
houses  and  wagons,  &c.,  will,  by  supposition,  be  diminished  by 
the  seven  hundred  millions  sent  abroad  to  buv  cottons  and 
woollens  and  iron  before  made  at  home  ;  and,  although  houses 
and  wagons  "  are  never  imported,"  their  exchangeable  value 
depends  upon  the  effective  demand. 

Let  us  now  try  again  to  imagine  how  salaried  men  would  be 
affected  by  the  suppression  of  the  three  industries  in  ques- 
tion. Evidently  the  educated  men,  now  employed  in  and 
about  those  industries,  would  become  competitors  over  and 
above  those  now  competing  for  pulpits,  professorships,  seats 
upon  the  bench,  and  other  dignified  occupations  yielding 
salaries.  The  X  representing  any  particular  salary  must 
then,  after  a  while,  come  to  be  a  smaller  proportion  of  the  total 
annual  product  available  for  home  consumption,  as  already 
observed  ;  and  this  last  being,  by  the  supposition,  reduced  by 
the  one  tenth  part  sent  abroad,  the  particular  salary  would 


"  ARGUMENT   AGAINST    PROTECTIVE   TAXES."  13 

soon  come  to  be  not  only  a  dirainisbed  proportion  of  the 
previous  annual  product,  but  a  diminished  proportion  of 
nine  tenths  of  the  previous  product.  In  short,  less  being 
produced  in  the  country,  there  would  be  less  to  divide  between 
rent,  profits,  and  wages. 

It  is  only  a  couple  of  weeks  since  I  became  aware  that 
Professor  Sumner  had  published  in  March  the  article  now 
under  review ;  and  the  present  paper  has  been  written  in 
response  to  his  request  conveyed  in  the  following  sen- 
tence :  — 

"  If  this  be  not  so,  let  some  protectionist  analyze  the  operation  of 
his  system,  and  show,  by  reference  to  undisputed  ecouomical  principles, 
where  and  how  it  exerts  any  effect  on  production  to  increase  it." 

In  return  I  have  only  to  request  that,  if  this  paper  has  not 
duly  met  his  requisition,  he  will  point  out  with  precision 
exactly  where  and  how  it  is  erroneous  or  defective.  The  sub- 
ject is  one  of  tremendous  importance,  and  there  are  thousands 
of  honest  and  intellio^ent  men  who  desire  to  be  shown  exactlv 
what  is  and  what  is  not  true  with  regard  to  it. 

I  have  endeavored  to  avoid  all  side  issues,  and  to  go  direct 
to  the  chief  point  in  which  the  scholastic  political  economy 
appears  to  be  erroneous.  This  is  a  small  matter,  indeed,  when 
once  pointed  out ;  but  it  has  been  nevertheless  sufficient  to 
paralyze  the  keen  intellects  of  its  professors,  sufficient  to 
prevent  their  improving  political  economy  into  a  real  science, 
and  sufficient  to  force  them  to  conclusions  the  reverse  of 
those  drawn  by  the  practical  man  from  the  industrial  phe- 
nomena which  he  is  obliged  every  day  and  hour  to  interpret, 
under  the  penalty  of  ruin  if  he  fail  to  interpret  correctly. 


REVIEW 

Of  an  article  hj  Prof.  Artlmr  L.  Perry,  Williams  College,  Willlamstown, 
Mass.,  in  the  Journal  of  the  American  Agricultural  Association  for  Julj 
and  October,  1881,  entitled,  — 

"  Farmers  and  the  Tariff." 


Professor  Perry  states  substantially  as  follows  (liis  state- 
ments being  merely  condensed)  that  — 

"  the  war  of  the  American  Revolution  was  waged  mainly  in  the  in- 
terests of  a  free  trade ;  that  one  of  the  first  acts  of  the  thirteen  colo- 
nies, April  6,  1776,  was  to  estabhsh  free  trade,  which  substantially 
continued  until  the  present  government  was  established  in  1789  ;  that 
no  ill  effects  followed,  and  that  the  country  was  not  flooded  at  that 
time  with  the  cheap  goods  of  foreigners,  because  the  only  way  that  can 
be  brought  about  is  for  the  natives  to  flood  the  foreigners  with  cheap 
native  goods  in  exchange.  In  1789  shrewd  members  of  the  first  Con- 
gress,  mostly  from  New  England,  at  the  instance  and  under  the  pres- 
sure of  certain  men  who  thought  thereby  to  raise  the  price  artificially 
of  their  own  special  home  products,  by  means  of  lobbying  and  log- 
rolling, caused  to  pass  the  first  tai-iff  bill,  of  which  the  preamble  was  : 
'  Whereas,  it  is  necessary  for  the  support  of  the  Government,  for  the 
discharge  of  the  debts  of  the  United  States,  and  the  encouragement 
and  protection  of  manufactures,  that  duties  be  laid,'  and  so  on.  The 
duties  were  low,  but  they  introduced  a  false  principle,  —  that  a  man's 
neighbors  may  be  taxed  indefinitely  to  hire  him  to  carry  on  an  alleged 
unprofitable  business ;  and  this  utterly  false  principle  has  bi'ought  on 
the  protective  system,  which  has  grown  so  unjust,  onerous,  and  abomi- 
nable that  no  other  free  people  would  submit  for  a  single  year.  It 
was  well  understood  in  1789  that  this  system  would  be  hostile  to  the 
interest  of  the  farmers  as  such ;  the  fallacy  that  a  home  market  in 
some  mysterious  way  compensates  the  farmers  was  not  then  invented, 
and  can  now  be  exploded  by  a  few  words.  These  words  are  :  *  Unless 
it  can  be  shown  that  protection  —  that  is  to  say,  restriction  —  increases 


2  REVIEW  OP  phofessor  perry's 

the  number  of  births  or  diminishes  the  number  of  deaths,  it  is  in  vain 
to  claim  that  there  are  any  more  mouths  to  be  fed  by  the  farmers 
than  there  would  be  under  freedom.' 

"  Fisher  Ames  said  in  1789  :  '  From  the  different  situation  of  man- 
ufacturers in  Europe  and  America,  encouragement  is  necessary.  In 
Europe  the  artisan  is  driven  to  labor  for  his  bread.  Stern  Necessity 
with  her  iron  rod  compels  his  exertion.  In  America,  invitation  and 
encourasfement  are  needed.  Without  them  the  infant  manufacture 
droops,  and  those  who  might  be  employed  in  it  seek  with  success  a 
competency  from  our  cheap  and  fertile  soil.' 

"  This  lets  the  protectionist  cat  right  out  of  her  bag.  Our  people 
are  not  poor  enough,  and  never  were,  to  carry  on  unprofitable  branches 
of  industry  to  support  which  the  whole  community  has  to  be  taxed, 
and  particularly  the  agricultural  classes.  What  then  is  to  be  done  ? 
Why,  drag  down  agriculture  by  abominable  taxes  to  the  level  of  the 
alleged  unprofitable  infant  manufactures.  '  Protection  assumed  at 
the  outset,  and  has  maintained  to  this  day,  an  attitude  of  unceasing 
hostility  to  the  tillers  of  the  soil.  Protectionist  manufacturers,  who 
are  a  mere  fraction  of  the  population,  have  cajoled  the  farmers,  who  are 
one  half  the  population,  to  consent  to  pay  for  their  supplies  prices  artifi- 
cially enhanced  by  law,  and  to  sell  their  produce  at  prices  artificially 
depressed  by  law.'  Tliere  never  was  a  worse  delusion  than  tiiis  on  the 
part  of  the  farmers,  and  there  never  was  a  worse  swindle  than  this  on 
the  part  of  the  party  of  the  other  part.  But  the  manufacturers  as  a 
body  are  not  benefited  ;  many  of  them  lose  two  dollars  by  protection 
for  every  one  dollar  which  they  gain ;  so  that  the  fx'ee-traders  of  this 
country  are  fighting  a  battle  in  behalf  of  the  manufacturers  them- 
selves (selfishness  is  always  short-sighted)  as  well  as  in  behalf  of  the 
farmers.  That  protective  duties  are  a  great  burden  is  shown  by  the 
fact  that  the  protectionist  manufacturers  never  like  to  pay  them  them- 
selves ;  it  seems  that  what  is  sauce  for  the  agricultural  goose  is  not 
good  for  the  protectionist  gander.  Whether  the  formers  see  their  true 
interest  or  not  the  fact  remains  that  they  are  the  ass  that  bears  most 
of  the  burden  and  eats  least  of  the  hay  of  protection." 

Let  us  first  examine  the  historical  portion  of  this  document. 

It  is  undoubtedly  true  that  one  object  of  the  War  of  the 
Revolution  was  to  free  the  trade  of  the  colonies  from  the  re- 
strictions which  Great  Britain  had  placed  upon  it  for  the  benefit 
of  her  own  commerce  and  manufactures.     It  was,  therefore,  in 


"  FARMERS    AND    THE    TARIFF."  8 

one  sense  waged  "  in  the  interests  of  a  free  trade."  But  it  was 
not  waged  in  tlie  interests  of  any  such  free  trade  as  Professor 
Perry  advocates,  —  a  free  trade  which  denies  the  right  of  a 
nation  to  place  any  restrictions  having  in  view  the  encourage- 
ment of  industries  deemed  necessary  or  useful  to  the  whole 
community.  On  the  contrary,  the  colonies  strove  for  the  right 
to  regulate  their  own  commerce  and  industry  as  they  pleased, 
and,  as  soon  as  independent,  they  proceeded  to  exercise  the 
right.  It  was  found,  however,  that  the  action  of  Virginia  was 
ineffectual  without  the  co-operation  of  Maryland,  and  that 
those  two  could  not  act  effectually  without  Pennsylvania,  nor 
those  three  without  New  York,  and  so  on.  Mr.  Madison, 
writing  to  Joseph  C.  Cabell,  Sept.  18, 1828,  records  these  facts, 
and  adds  in  illustration  the  following :  — 

"  There  is  a  passage  in  Mr.  Necker's  work  on  the  finances  of  France 
which  affords  a  signal  ilhistration  of  the  difficulty  of  collecting  in  con- 
tiguons  communities  indirect  taxes  when  not  the  same  in  all,  by  the 
violent  means  resorted  to  against  smu2f2flin"r  from  one  to  another  of 
them.  Previous  to  the  late  revolutionary  war  in  that  country,  the 
taxes  were  of  very  different  rates  in  the  different  provinces.  .  .  .  The 
consequence  was  that  the  standing  army  of  patrols  against  smuggling 
had  swollen  to  the  number  of  twenty-three  thousand  ;  the  annual 
arrests  of  men,  women,  and  children  engaged  in  smuggling,  to  five 
thousand  five  hundred  and  fifty,  .  .  .  more  than  three  hundred  of 
whom  were  consigned  to  the  terrible  punishment  of  the  galleys." 

The  colonies,  then,  did  not  go  to  war  to  deprive  themselves 
of  the  right  to  regulate  their  own  trade  according  to  their  own 
notions  of  what  is  advantageous  to  the  whole  community ;  and 
Professor  Perry's  labored  introduction  tends  to  produce  an  im- 
pression the  reverse  of  what  is  true. 

But  this  is  a  trifle  to  what  follows,  when  he  says  that  "  no 
ill  effects  followed  this  general  liberty  to  buy  and  sell  with 
foreigners,"  <fec. 

Tlie  real  facts  are  that  upon  the  opening  of  the  ports,  after 
the  war,  an  immense  quantity  of  foreign  manufactures  was  in- 
troduced ;  and  the  people  were  tempted  by  the  sudden  cheap- 
ness of  imported  goods  to  purchase  beyond  their  capacity  for 


i  REVIEW   OF   PROFESSOR   PERRY'S 

payment.  The  bonds  of  men  whose  competency  to  pay  their 
debts  was  unquestionable  could  not  be  negotiated  but  at  a  dis- 
count of  thirty,  forty,  and  fifty  per  cent ;  real  property  was 
scarcely  vendible,  and  sales  of  any  article  for  ready  money 
could  only  be  made  at  a  ruinous  loss.  Property,  when  brought 
to  sale  under  execution,  sold  at  so  low  a  price  as  frequently 
to  ruin  the  debtor  without  paying  the  creditor.  A  disposition 
to  resist  the  laws  became  common.  Laws  were  passed  by 
which  property  of  every  kind  was  made  a  legal  tender  in  the 
payment  of  debts,  though  payable  according  to  contract  in  gold 
and  silver.  Other  laws  delayed  payments,  so  that  of  sums 
already  due  only  a  third,  and  afterwards  only  a  fifth,  was 
annually  recoverable  in  the  courts  of  law.  Silver  and  gold 
departed  to  pay  for  the  necessary  and  unnecessary  commodities 
imported. 

In  this  condition  of  financial  matters,  the  public  securities  fell 
to  fifteen,  twelve,  and  even  ten  cents  in  the  dollar,  ruining 
a  large  portion  of  the  warmest  friends  of  the  Revolution,  who 
had  risked  their  lives  and  embarked  their  entire  property  in  its 
support. 

In  every  part  of  the  States  the  scarcity  of  money  had  become 
a  common  subject  of  complaint,  and  the  difficulty  of  paying 
debts  had  become  so  common,  that  riots  and  combinations 
were  formed  in  many  places,  and  the  operations  of  civil  gov- 
ernment were  suspended. 

The  authorities  for  the  above  are,  Dr.  Hugh  Williamson, 
Minot's  "  History  of  the  Insurrection  in  Massachusetts,"  pp. 
2,  13  ;  Marshall's  "  Life  of  Washington,"  pp.  75,  88,  121 ; 
Ramsay's  "  South  Carolina,"  vol.  ii.  p.  428 ;  Belknap's  "  His- 
tory of  New  Hampshire,"  vol.  ii.  pp.  352,  356,  429 ;  Matthew 
Carey's  works,  and  the  "  Questions  of  the  Day,"  by  Dr.  Elder. 

But  Professor  Perry  says  that  "  no  ill  effects  followed  this 
general  liberty  to  buy  and  sell  with  foreigners,"  &c. 

Let  the  reader  pause  a  moment  over  this  extraordinary  mis- 
representation. Had  it  been  made  by  one  who  was  impelled 
by  avarice  or  revenge,  there  would  be  nothing  marvellous 
about  it ;  but  here  is  a  very  different  case.  A  professor  in  a 
respectable  college,  the  author  of  a  treatise  on  political  economy 


"  FARMERS   AND    THE   TARIFF." 


said  to  be  used  in  many  universities,  a  gentleman  whose  offi- 
cial position  makes  him  a  trustee  of  the  truth  for  the  rising 
generation,  should  not  be  accused  of  wilful  untruthfulness. 
No  !  it  is  more  courteous,  more  agreeable,  and  doubtless  more 
jujit,  to  trace  the  misstatement  to  an  unfortunate  habit  of 
hastily  concluding  that  events  did  actually  happen  in  this  or 
that  manner,  because,  if  his  theories  be  correct,  they  must  so 
have  happened.  He  feels  perfectly  sure  of  his  doctrine  ;  and, 
such  being  the  doctrine,  the  events  must  have  been  as  stated  ; 
but,  unfortunately  for  the  deduced  history,  the  doctrine  itself 
cannot  be  maintaiued.  Imports  are  not  exchanged  for  ex- 
ports. Imports  are  sold  for  money,  and  the  money  is  there- 
after either  carried  abroad  or  invested  in  exports,  according 
to  circumstances ;  or  it  may  be  invested  in  Government  or 
other  securities,  and  so  run  the  country  in  debt.  But  paying 
in  money  or  in  securities  has  a  limit  which  is  speedily 
reached ;  and  afterwards,  imports  must  be  limited  by  the 
foreign  demand  for  exports,  even  if  this  pays  for  only  a  fifth  or 
a  tenth  of  what  the  country  could  produce  and  enjoy  through 
its  own  labor.  But  before  the  free-trade  disease  reaches  this 
chronic  stage  it  must  pass  through  the  acute  stage.  There 
are  the  export  of  treasure ;  the  contraction  of  all  values  as 
measured  by  treasure  ;  the  aggravation  of  all  debts,  public  and 
private  ;  forced  liquidations ;  widespread  bankruptcy,  and  a 
general  diminution  of  employment  to  industry. 

The  theory  which  teaches  that  the  only  way  in  which  a 
country  can  be  flooded  with  the  cheap  goods  of  foreigners  is 
for  the  natives  to  flood  the  foreigners  with  cheap  goods  in  ex- 
change is  an  incorrect  theory  ;  and  the  history  deduced  from  it 
is  consequently  the  opposite  of  the  actual  course  of  events, —  all 
which  proves  only  what  common  sense  would  have  seen  at 
once,  namely,  that  history  sliould  not  be  inferred  from  theories, 
but  ascertained  by  reference  to  the  written  and  printed  records 
of  the  times. 

Another  misstatement  as  to  facts  may  be  found  in  the  alle- 
gation that  in  1789  men  had  not  yet  invented  the  theory  that 
protection  would  benefit  farmers  by  enlarging  the  home 
market. 


b  REVIEW   OP   PROFESSOR   PERRY  S 

In  Adam  Smith's  lectures,  afterwards  published  (in  1776) 
under  the  title  of  "  Inquiry  into  the  Nature  and  Causes  of  the 
Wealth  of  Nations,"  the  idea  of  the  great  advantage  of  the  home 
market  crops  out  frequently,  and  may  be  found  more  particu- 
larly in  bk.  iv.  chap,  ix.,  last  paragraph  but  four,  where  he 
says :  — 

"  Whatever,  then,  tends  to  diminish  in  any  country  the  number  of 
artificers  and  manufacturers  tends  to  diminish  the  home  market,  —  the 
most  important  of  all  markets  for  the  rude  produce  of  the  land." 

The  same  idea  appears  frequently  in  Alexander  Hamilton's 
writings.     He  says :  — 

"There  appear  strong  reasons  to  regard  the  foreign  demand  for 
that  (agricultural)  surplus  as  too  uncertain  a  reliance,  and  to  desire  a 
substitute  for  it  in  an  extensive  domestic  market. 

"  To  secure  such  a  market  there  is  no  other  expedient  than  to  pro- 
mote manufacturing  establishments.  Manufacturers,  who  constitute 
the  most  numerous  class  after  the  cultivators  of  the  land,  are  for  that 
reason  the  principal  consumers  of  the  surplus  of  their  labor. 

"  The  idea  of  an  extensive  domestic  market  for  the  surplus  prod- 
uct of  the  soil  is  of  the  first  consequence.  It  is,  of  all  things,  that 
which  most  effectually  conduces  to  a  flourishing  state  of  agriculture." 

Benjamin  Franklin,  writing  home  from  London  in  1771, 

says  :  — 

"  Every  manufacturer  encouraged  in  a  country  makes  part  of  a  home 
market  for  jirovisions  among  ourselves,  and  saves  so  much  money  to 
the  country  as  must  otherwise  be  exported  to  pay  for  the  manufac- 
tures he  supplies.  Here  in  England  it  is  well  known  that  wherever  a 
manufacture  is  established  which  employs  a  number  of  hands,  it  raises 
the  value  of  land  in  the  country  all  around  it.  It  seems,  therefore,  the 
interest  of  our  farmers  and  owners  of  land  to  encourage  our  young 
manufactures  in  preference  to  foreign  ones." 

Professor  Perry  says  that  this  doctrine,  which  he  calls  a 
fallacy,  had  not  been  invented  in  1789 !  The  reader  will  see 
that  he  is  here  again  in  error  as  to  matters  of  fact.  The  doc- 
trine was  well  established  long  before  the  date  named,  and  has 


"  FARMEES   AND   THE   TARIFF."  7 

never  been  shaken.  Tt  was  reaffirmed  by  General  Jackson  in 
his  celebrated  letter  to  Dr.  Coleman  in  1824,  and  by  John 
Stuart  Mill,  in  his  Political  Economy,  thirty  years  later.  In- 
deed, it  is  nearly  self-evident ;  bat  Professor  Perry  denounces  it 
as  a  Mlacy  which  a  few  words  will  explode,  and  he  gives  us 
the  few  words,  which  are  :  — 

"  Unless  it  can  be  shown  that  protection  —  that  is  to  say,  restriction — 
increases  the  number  of  births  or  diminishes  the  number  of  deaths,  it  is 
in  vain  to  claim  that  there  are  any  more  mouths  to  be  fed  by  the 
formers  than  there  would  be  under  freedom." 

This  is  a  question  about  which  a  farmer  is  as  good  a  judge 
as  any  professor.  In  twenty-five  years  the  population  of  the 
United  States  will  be  doubled,  — it  will  be  100,000,000,  — capa- 
ble, if  all  employed  in  agriculture,  of  producing  food  and  raw 
materials  for  250,000,000  to  300,000,000  of  people.  Nowhere 
on  this  planet  are  to  be  found  the  requisite  number  of  purcha- 
sers. In  England  and  Scotland  and  Wales  the  people  (less  than 
30,000,000)  have  been  rash  enough  to  make  themselves  largely 
dependent  upon  foreign  food  ;  but  even  their  demand  is  liable 
to  very  great  variations.  Other  countries  pursue  the  more 
sensible  policy  of  raising  in  ordinary  seasons  enough  for  them- 
selves. 

To  repeat:  in  twenty-five  years  the  population  of  the  whole 
country  will  be  doubled ;  that  of  the  now  less  settled  portions 
will  be  increased  three,  four,  or  five  fold.  Let  the  farmer  in 
such  portions  consider  whether  he  would  prefer  the  increase  of 
population  to  be  mostly  farmers  or  mostly  people  who  buy  and 
do  not  produce  farm  products.  It  will  not  take  him  long  to 
make  up  his  mind,  and  his  judgment  will  be  worth  as  much  as 
that  of  all  the  political  economists  in  Europe  and  America. 
His  judgment  will  agree  with  the  mature  and  deliberate  opinion 
of  such  men  as  Franklin,  Hamilton,  Jefferson,  Andrew  Jackson, 
Henry  Clay,  Daniel  Webster,  and  the  majority  of  the  great 
statesmen  who  have  been  the  pride  of  our  country. 

The  article  now  under  review  contains  two  argumentations 
which  it  may  be  well  to  examine,  coming  as  they  do  from  a 
noted  political  economist. 


8  REVIEW    OF   PROFESSOR  PERRY's 

The  first  is  in  favor  of  free  trade.    It  runs  thus  :  — 

"  Free  trade  does  not  compel  anybody  to  trade ;  it  does  not  even 
recommend  anybody  to  trade  ;  it  merely  allows  those  persons  to  trade 
who  find  it  for  their  profit  to  do  so.  Unless  it  be  profitable  for  them 
to  trade  they  will  not  trade.     They  have  no  motive  to  trade." 

The  original  free-trade  argument  (by  Adam  Smith)  went 
farther,  and  maintained  not  only  that  each  individual  knew  his 
own  interest  (both  immediate  and  permanent)  better  than  any 
statesman  or  law-giver  could,  but  also  that  what  the  individual 
elected  to  do  must  necessarily  be  that  which  best  promoted  the 
national  wealth.  These  extravagant  propositions  were  re- 
peatedly shown  to  be  untenable,  were  abandoned  by  Mr.  John 
Stuart  Mill,  and  are  abandoned  by  Professor  Perry,  inasmuch 
as  in  the  very  article  now  under  review  he  maintains  that 
the  manufacturers  do  not  understand  their  own  interests,  that 
the  farmers  do  not  understand  theirs,  and  that  a  majority 
of  the  American  people  have  for  a  hundred  years  been  pursuing 
a  pernicious  and  pauperizing  policy. 

But  in  place  of  these  abandoned  positions  Professor  Perry 
gives  us  the  following :  — 

"  If  it  be  profitable  for  any  two  persons  to  trade,  and  a  law  steps  in 
to  prevent  it,  then  that  law  destroys  property,  interferes  with  rights, 
and  makes  the  persons  subject  to  it  so  far  forth  slaves." 

But  as  the  identity  of  individual  and  national  interests  has 
been  abundantly  disproved,  this  proposition  is  exclusively  one 
regarding  the  rights  of  property.  It  is  a  proposition  in  law  or 
in  social  science.  It  cannot  be  maintained  either  in  law  or  in 
social  science ;  but  if  it  could,  it  would  still  be  out  of  place  in 
a  discussion  as  to  whether  free  trade  or  protection  will  best 
promote  the  wealth  of  a  particular  nation.  Both  law  and 
social  science  demand  that  the  individual  interest  shall  give 
way  to  the. national  interest;  with  compensation,  it  is  true,  in 
some  cases,  but  not  in  those  cases  where  the  betterment  out- 
weighs the  damage.  To  suppose  that  property  confers  the 
right  to  nullify  the  social  and  economical  regime  under  which 


"  FARMERS    AND    THE    TARIFF 


?> 


it  was  acquired  would,  I  think,  have  astonished  Socrates  or 
any  subsequent  moralist ;  and  to  expect  that  a  discussion  of 
the  rights  of  property  will  reveal  the  secrets  of  the  nature  and 
causes  of  the  wealth  of  nations  would  equally  surprise  all 
political  economists  save  Bastiat  and  his  imitators. 

The  second  and  last  argument  which  it  will  be  necessary  to 
look  at  is  the  following :  — 

"Your  protectionist  thinks  it  is  a  very  good  thing  for  the  farmers  and 
for  the  people  generally  to  pay  protective  prices,  but  he  never  likes  to 
pay  them  himself.  He  has  no  scruple  in  evading  them,  if  he  can  do 
so  by  any  possibility.  He  denies  by  his  own  actions,  which  speak 
louder  than  words,  what  he  is  constantly  alHrming  in  words,  namely, 
that  protection  is  a  good  thing." 

Let  us  test  this  method  of  reasoning.  A  just,  efficient,  and 
economical  government  gives  us  good  roads,  good  water,  safe 
buildings,  defence  against  public  and  private  violence,  and  a 
thousand  other  desirable  things ;  but  it  costs  money,  and  many 
individuals,  after  enjoying  its  benefits,  are  unwilling  to  pay 
their  proportion  of  the  expense.  They  thus  deny  by  their 
actions,  which  speak  louder  than  words,  what  they  are  con- 
stantly affirming  in  words,  namely,  that  a  just,  efiicient,  and 
economical  government  is  a  good  thing. 

Again,  laws  against  cheating  and  robl)ing  are  generally 
thought  to  be  good ;  but  many  men,  while  they  themselves 
enjoy  protection  against  cheating  and  robbing  on  the  part  of 
others,  will  not  hesitate,  whenever  they  can,  to  cheat  and  rob  ; 
thus  denying  by  actions,  which  speak  louder  than  words,  what 
they  are  constantly  affirming  in  words,  that  cheating  and  rob- 
bing ought  to  be  suppressed. 

Again,  if  the  protectionist  doctrine  be  correct,  the  American 
system  vastly  increases  the  gross  annual  product  of  the  country, 
which  pays  all  rents,  profits,  fees,  salaries,  and  wages,  which 
has  endowed  our  institutions  of  learning,  and  brought  our  pros- 
perity and  civilization  to  its  present  height.  Nevertheless,  the 
wealthier  classes  generally  keep  themselves  in  a  fever  because 
under  this  system  their  champagnes,  gloves,  ribbons,  silks, 
satins,  and  fine  broadcloths,  brought  from  abroad,  cost  much 


10  REVIEW    OF    PROFESSOR   PERRY'S 

higher  than  they  would  were  there  no  duties.  They  do  not 
Hke  to  pay  the  cost  of  the  prosperity  they  enjoy.  But  this 
does  not  prove  that  prosperity  is  a  bad  thing.  Tlie  farmer 
sees  that  without  protection  he  would  have  to  go  without  three 
fourths  of  the  comforts  he  now  possesses ;  the  rich  do  not  see 
that  under  free  trade  reduced  incomes  would  compel  them  to 
forego  a  large  portion  of  their  present  luxuries.  They  deny 
the  allegation  with  emphasis  ;  but  neither  the  denial  nor  the 
emphasis  proves  anything.  The  proof  must  be  sought  from 
combined  observation  and  reasoning.  Patient  and  truthful 
search  after  facts,  patient  and  truthful  reasoning  from  them, 
patient  and  truthful  examination  and  re-examination  of  both 
facts  and  reasoning,  when  they  appear  to  disagree,  may  at  some 
future  time  build  up  a  solid  and  enduring  science  of  political 
economy.  Violence,  denunciation,  rhetoric,  fierce  onslaughts 
upon  individuals  or  classes,  vehement  appeals  to  the  short- 
sighted pocket,  will  in  no  way  assist  in  its  construction. 

Having  examined  Professor  Perry's  historical  and  logical 
methods,  we  are  in  a  position  to  form  a  correct  judgment  as  to 
the  rest  of  his  article. 

He  asserts  that  the  manufacturers  are  so  foolish  as  to  sup- 
port measures  which  do  not  benefit  them  at  all  as  a  whole 
class.  Some  of  the  shrewdest  and  most  unscrupulous  are  bene- 
fited ;  and  these  wicked,  selfish,  mendicant  swindlers  have 
cajoled  the  farmers  into  consenting  to  pay  for  their  supplies 
prices  artificially  enhanced  by  law,  and  selling  their  produce 
AT  PRICES  artificially  DEPRESSED  BY  LAW.  This  they  havc  done 
by  lobbying  and  log-rolling,  —  that  is,  by  either  deceiving  or 
corrupting  a  majority  of  the  Representatives  and  Senators  in 
Congress.  A  majority  of  the  American  people  for  a  hundred 
years  have  been  either  fools  or  knaves,  or  both ;  and  the  farm- 
ers especially  are  "  the  ass  that  bears  most  of  the  burden  and 
eats  least  of  the  hay  of  protection."  The  only  pure,  patriotic, 
and  intelligent  people  in  the  country  are  the  free-traders.  No 
evil  has  ever  been  experienced  from  free  trade;  no  good  has 
ever  come  from  protection. 

The  actual  liistory  from  beginning  to  end  has  been  precisely 
opposite  to  that  which  Professor  Perry  has  laid  before  us. 


"  FARMERS   AND   THE   TARIFF."  11 

In  1789  it  was  well  known  to  thinking  men  that  the  steady 
and  permanent  interests  of  farmers  could  be  secured  only  by 
increasing  the  proportion  of  the  community  which  consumed 
and  did  not  produce  farm  products. 

In  the  years  immediately  preceding  1789  free  trade  had 
brought  intolerable  evils  upon  the  country ;  and  it  was  for  this 
reason,  as  well  as  with  the  design  of  benefiting  the  farming  in- 
terest by  adding  to  the  number  of  their  customers,  that  duties 
were  imposed  upon  imported  manufactures.  The  Napoleonic 
wars  followed  with  a  great  demand  for  our  exports,  and  then 
came  the  period  of  the  embargo  and  the  war  with  England  of 
1812-15.  During  the  period  of  non-intercourse  and  the  war 
our  manufactures  increased  greatly ;  but  after  peace  was  de- 
clared there  came  a  period  of  excessive  importations  similar  to 
that  which  followed  the  War  of  the  Revolution.  Although 
free-traders  assert  that  "  the  only  way  a  country  can  be  flooded 
with  the  cheap  goods  of  foreigners  is  for  the  natives  to  flood 
the  foreigners  with  cheap  goods  in  exchange,"  the  facts  were 
the  reverse  of  those  deduced  from  their  theories.  In  point  of 
fact  our  country  ivas  flooded  with  cheap  foreign  goods  ;  in 
point  of  fact  we  did  buy  enormously  beyond  the  amount  which 
the  foreigner  would  take  pay  for  in  goods  ;  in  point  of  fact  our 
treasure  ivas  exported,  and  this  (contrary  again  to  free-trade 
theories)  did  plunge  the  country  into  immeasurable  distress, 
destroying  a  vast  number  of  our  manufacturing  establishments, 
and  affecting  in  a  disastrous  manner  the  farming  interests  as 

well. 

It  was  then  perceived  that  the  protection  which  the  existing 
tariff  gave  to  manufactures  was  entirely  insufficient  in  times 
when  English  speculation  or  distress  threw  immense  masses 
of  goods  upon  our  shores ;  and  it  was  perceived  that  the  ruin 
brought  down  upon  every  interest  by  a  short  period  of  great 
cheapness  cost  the  country  a  hundred  times  what  it  gained  by 
the  momentary  and  illusive  advantage  of  a  low-moneyed  price. 
It  was  in  1824  that  General  Jackson  asked,  "  Where  has  the 
American  farmer  a  market  for  his  surplus  products  ?  "  and  rec- 
ommended as  a  remedy  to  draw  from  agriculture  the  super- 
abundant labor,  and  employ  it  in  machinery  and  manufactures. 


12  REVIEW   OP   PROFESSOK   PERRY's 

It  was  to  benefit  the  farmer  that  he  proposed  such  higher  duties 
as  would  make  the  other  industries  safe  in  times  of  foreign 
panics  or  periods  of  speculation.  There  would  have  been  a 
diverting  scene  had  any  one  assured  the  clear-headed  old  war- 
rior and  statesman  that  commodities  are  alwaj's  paid  for  with 
commodities,  and  that  no  harm  can  come  to  a  country  from  an 
inundation  of  foreign  goods. 

In  1833,  in  consequence  of  the  threatening  attitude  of  several 
of  the  Southern  States  which,  under  the  slavery  regime^  were 
unable  or  unwilling  to  establish  manufactures,  the  tariff  was 
reduced  ;  and  in  the  ensuing  panic  of  1837  the  lessons  of  1786 
and  1820  were  repeated,  and  it  again  became  apparent  that  the 
farmer  absolutely  required  the  custom  of  the  manufacturing  and 
mechanical  classes,  and  that  these  could  only  be  rendered  safe 
by  duties  sufficiently  high  to  prevent  foreign  competition  not 
merely  in  ordinary  times,  but  also  and  chiefly  during  periods  of 
financial  disturbance  in  England.  Any  other  policy  would 
be  as  wise  as  it  would  be  for  Holland  to  build  her  dikes  only 
high  enough  to  exclude  the  ocean  in  ordinary  weather,  pre- 
ferring occasional  submergence  to  a  somewhat  more  expensive 
security.  Nay,  it  would  not  be  as  wise,  for  the  higher  duty 
does  not  entail  higher  prices.  These,  as  regards  such  goods 
as  concern  the  great  mass  of  the  people,  are  determined  by  in- 
ternal competition.  They  will  be  as  low  as  they  can  be  under 
the  circumstances  of  the  country,  whether  the  duty  be  forty 
per  cent  or  sixty  per  cent ;  indeed,  the  higher  duty  would  be 
more  likely  to  lower  the  price  by  giving  a  greater  sense  of 
security,  and  tliereby  attracting  more  capital  to  the  industry. 
I  am  not  aware  that  any  respectable  economist,  from  Adam 
Smith's  days  to  ours,  has  written  anything  which  contra- 
dicts this  proposition.  The  goods  produced  at  home  are  in 
a  few  years  much  cheaper  than  the  foreign  goods  with  duty 
added,  and  they  gradually  grow  cheaper  and  cheaper  as  skill 
and  the  increasing  use  of  machinery  more  and  more  counter- 
balance, and  in  many  cases  overcome,  the  effect  of  a  higher 
rate  of  wages  and  a  higher  rate  of  interest.  The  heavier 
cotton  goods  were  long  ago  cheaper  even  in  money  than 
they  could   be   imported,   duty   free ;    and   free-trade   writers 


"  FARMERS    AND    THE    TARIFF."  13 

allege  that  heavy  woollens  have  reached  nearly  an  equality 
in  cost  with  foreign  goods.  To  be  sure,  after  making  this 
allegation  they  state  that  the  duty  is  135  per  cent,  and  in- 
vite the  "  hod-carrier  and  the  poor  sewing-girl  "  to  believe 
that  they  pay,  and  the  manufacturer  pockets,  the  135  per  cent ; 
but  everybody  knows  that  any  reasonable  prospect  of  making 
ten  per  cent  a  year  would  cause  a  lunidred  millions  to  be  in- 
vested in  new  woollen  mills ;  and  the  inference  is  unavoidable 
that  the  poor  get  their  clothing  at  what  it  costs,  and  a  profit 
averaging  about  the  same  as  is  made  in  other  industries. 

In  every  industry  the  demand  occasionally  outruns  the 
power  of  production,  and  then  there  are  large  profits  ;  and 
occasionally  the  power  of  production  outruns  the  demand, 
and  then  there  are  severe  losses.  The  steel  rails  of  Professor 
Perry's  article  are  in  point.  The  productive  capacity  of  Eng- 
land in  1880  was  about  one  million  tons,  and  that  of  the  United 
States  the  same,  with  the  prospect  of  reaching  a  million  and  a 
half  in  1882.  Before  steel  rails  were  made  in  this  country  the 
price  was  not  less  than  $150  a  ton,  and  the  demand  has  so 
suddenly  outrun  the  means  of  supply,  that  the  same  price 
would  very  probably  have  been  reached  again  had  we  depended 
upon  England.  Tbe  present  price  in  England  is  what  answers 
to  a  demand  for  one  million  of  tons,  and  Professor  Perry  bases 
his  calculations  upon  the  assumption  that  the  price  in  Great 
Britain  would  have  been  the  same  in  the  face  of  a  demand  for 
two  millions  of  tons,  and  in  face  of  a  knowledge  that  the  Amer- 
icans could  not  make  a  ton  for  themselves !  As  it  is,  the 
manufacturers  of  steel  rails  are  making  money,  —  perhaps  a 
great  deal  of  money,  —  and  the  country  is  made  to  ring  with 
denunciations  of  the  wicked  and  deplorable  fact.  By  and  by 
they  will  be  losing  money,  and  then  the  free-trader  will  try  to 
gain  influence  with  them  by  urging  that  they  are  being  ruined 
by  the  duties  upon  iron.  But  the  country  can  console  itself  by 
the  reflection  that  whatsoever  they  make,  be  it  much  or  little, 
finds  its  way,  every  dollar  of  it  (save  and  except  what  is  spent 
upon  foreign  goods)  into  the  hands  of  the  American  working- 
man. 

The  observations  of  Fisher  Ames,  which  Professor  Perry 


14  EEVIEW   OP    PROFESSOR  PERRY'S 

contrives  to  misunderstand,  are  simple  enough.  They  assert 
merely  that  where  every  man  can  be  a  farmer  if  he  pleases, 
and  enjoy  the  competence  and  independence  of  that  j^osition,  it 
is  in  vain  to  endeavor  to  form  otlier  classes  unless  the  condition 
of  those  other  classes  be  made  sufficiently  profitable  to  compen- 
sate them  for  leaving  their  farms  or  for  abstaining  from  taking 
farms.  On  these  conditions  we  can  have  all  that  the  whole 
community  can  produce ;  on  any  other  terms  we  can  have  only 
the  food  and  raw  products  we  ourselves  need,  and  such  amount 
of  manufactured  articles  as  will  pay  for  what  raw  products 
foreigners  desire  to  take  from  us.  If  we  desire  a  far  greater 
value  of  their  products  than  they  desire  of  ours,  the  advantage 
we  possess  in  producing  raw  products  will  inure  entirely  to 
them  ;  and,  moreover,  we  shall  obtain  only  a  portion  —  in  our 
case  only  a  small  portion  —  of  what  we  desire,  and  shall  either 
have  large  quantities  of  food  to  be  given  to  animals  or  burned, 
or  else  be  discouraged  from  producing  more  than  a  fraction  of 
what  we  might  produce  under  wiser  arrangements.  We  should 
then  enjoy  in  some  sense  a  competency,  for  we  should  not 
starve ;  but  we  could  not  enjoy  our  present  comparative  opu- 
lence. If  any  one  doubts  this  let  him  study  Mr.  J.  S.  Mill's 
chapter  on  international  trade. 

Professor  Perry  is  an  admirer  of  Bastiat,  a  writer  who  en- 
deavored to  bolster  a  weak  cause  by  importing  into  economical 
questions  the  virulence  of  personal  and  class  abuse,  and  the 
inexhaustible  resources  of  rhetorical  inveracity  ;  a  writer,  how- 
ever, of  whose  works  one  serves  as  a  text-book  at  Harvard, 
while  another  —  the  worst  of  the  whole  —  is  recommended  to 
youth  by  the  authority  of  Yale.  According  to  Bastiat,  protec- 
tionists are  cheats,  thieves,  robbers,  swindlers,  &c.,  and  the 
denunciations  of  Professor  Perry  in  the  article  under  review 
are  of  a  similar  quality.  If  these  were  merited  it  would  be 
high  time  that  Harvard  and  Yale  and  our  other  universities 
looked  into  their  records  to  see  how  large  a  proportion  of  their 
foundations  had  been  derived  from  protectionists ;  to  what  ex- 
tent, in  short,  they  have  been  receivers  of  stolen  goods  ;  and 
they  should  lose  no  time  in  coming  to  a  solemn  resolution  to 
accept  nothing  in  future   from   so   infamous  and   polluted  a 


"  FARMERS   AND    THE   TARIFF."  15 

source  !  Meanwhile,  it  would  gratify  a  natural  curiosity  if 
some  one  would  tell  us  who  were  the  wicked  and  selfish  men 
who  have  for  a  hundred  years  cajoled  the  majority  of  the 
American  people.  The  men  who  introduced  the  cotton  manu- 
facture certainly  did  not  answer  to  the  description  ;  they  were 
men  with  large  heads  and  large  hearts,  many  of  them  the  sons 
of  farmers,  but  quite  able  to  comprehend  and  act  upon  the 
broadest  views  of  statesmanship.  They  were  not  wicked,  nor 
selfish,  nor  robbers,  nor  swindlers,  nor  men  who  would  cajole 
anybody.  They  engaged  in  an  enterprise  in  which  immense 
capital  was  embarked,  and  so  some  of  them  became  rich  ;  but 
no  one  can  truthfully  allege  that  they  used  their  wealth  in  a 
mean  or  selfish  manner.  As  to  this  point  Harvard  College 
can  be  called  as  a  witness.  Certainly  no  more  weighty  witness 
could  be  summoned ;  but  this  grand  old  witness  now  testifies 
emphatically  to  the  truth  of  the  free-trade  doctrines.  How  is 
this  ?  Is  it  not  almost  conclusive  ?  By  no  means  !  It  is  a 
transient  humor.  Her  belief  was  very  different  in  1776  when 
men  were  in  earnest;  it  was  very  different  during  the  greater 
portion  of  the  intervening  years,  and  it  will  be  different 
again  as  soon  as  it  shall  be  generally  seen  that  Great  Britain, 
through  her  commercial,  manufacturing,  and  educated  classes, 
organized  in  the  Cobden  Club,  is  assailing  our  prosperity  as 
perniciously  as  she  could  with  shot  and  shell  and  ironclads 
and  all  the  barbarity  and  devastation  of  war.  The  persistent 
pressure  of  transatlantic  condescension  will  then  cease  to 
sway  our  literary  classes  ;  and  we  shall  have  not  only  free 
farmers  and  free  working-men,  but  a  whole  population  which 
will  be  free  to  reason  for  themselves,  and  which  will  bestow 
upon  the  faithful  journalist,  author,  and  teacher  the  all-suffi- 
cient reward  of  the  sincere  and  enduring  approbation  of  his 
own  fellow-citizens. 

To  return  to  Professor  Perry's  article.     We  have  seen  — 
1st,  That  with  regard  to  the  Revolutionary  War,  it  so  states 
the  truth  as  to  lead  the  reader  inevitably  to  a  false  conclusion. 
It  does  the  same  also  witli  regard  to  the  opinions  of  Mr. 
Madison,  quoting  words  he  used,  but  failing  to  quote  the  ex- 
ceptions he  insisted  on. 


16  "farmers  and  the  tariff."     ^ 

2d,  That  with  regard  to  the  effects  of  free  trade  before 
1789,  and  in  regard  to  the  time  when  the  theory  of  the  home 
market  sprang  up,  it  makes  statements  which  are  absolutely 
contradicted  by  historical  records. 

3d,  That  its  only  argumentative  portions  will  not  bear  to  be 
confronted  with  any  known  system  of  reasoning. 

4th,  That  it  speaks  with  indecorous  and  unwarrantable  con- 
tempt of  the  majority  of  the  people  and  statesmen  of  the 
United  States,  representing  that  the  manufacturers  are  too 
stupid  to  know  their  own  interests,  and  yet  are  clever  enough 
to  deceive  or  corrupt  the  statesmen  and  to  cajole  the  farmers, 
whom  it  calls  "  the  ass  that  bears  most  of  the  burden  and  eats 
least  of  the  hay  of  protection." 

5th,  That  its  incautious  author  appears  to  have  fallen  into 
these  incongruities  in  consequence  of  reasoning  which  involved 
a  doctrine  in  political  economy  long  since  obsolete,  —  the  doc- 
trine, namely,  that  the  immediate  interests  of  the  individual 
are  always  necessarily  identical  with  the  immediate  and  per- 
manent interests  of  the  community  to  which  he  belongs. 
This  doctrine  may  linger  in  the  seclusion  of  this  or  that  uni- 
versity ;  but  as  each  class  emerges,  animally,  into  the  broad 
daylight  of  actual  life,  its  members  will  quickly  discover  that 
those  who  would  be  leaders  among  men  must  possess  them- 
selves of  some  philosophy  which  does  not  flatly  contradict  all 
that  their  eyes  and  ears  reveal  to  them  in  the  world  of  firm, 
concrete,  positive,  indisputable  fact. 


Ws  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW 

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OVERDUE. 


SEP    B  1933 


APR    ? 


REC'D  LD 

NOV  12  1956 


IP^' 


LD  21-50m-l,'33 


HT'30~>6 

.  :b35 


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